UPSC Prelims Practice Questions — Why did the Centre reduce import duty on edible oils?

Q1. With reference to the customs duty levied on imported edible oils in India, consider the following statements: Which of the statements given above is/are correct?

  1. Basic Customs Duty was not subsumed into the Goods and Services Tax and continues to be levied on imports.
  2. A reduction in Basic Customs Duty on crude edible oils requires the prior recommendation of the GST Council.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The Union government can lower the effective Basic Customs Duty on crude edible oils below the rate in the Customs Tariff Act, 1975 without Parliament amending that Act.
  2. Under Article 269A of the Constitution, Integrated GST is levied on goods imported into India.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Suppose the government of a country that imports most of its edible oil cuts the import duty on crude edible oils when domestic prices are high. Consider the following likely outcomes: Which of the outcomes given above is/are likely?

  1. The landed cost of imported crude edible oil falls, easing domestic retail prices.
  2. The prices that domestic crushers pay for oilseeds such as soybean and mustard tend to soften.
  3. The government gives up part of the customs revenue it would otherwise collect on each tonne imported.
  4. The price incentive for farmers to expand oilseed area under a domestic production mission is strengthened.
  • A. 1, 2 and 3 only
  • B. 2 and 4 only
  • C. 1 and 2 only
  • D. 1, 3 and 4 only

Q4. With reference to the FAO Food Price Index, consider the following statements: Which of the statements given above is/are correct?

  1. It measures the monthly change in international prices of a basket of food commodities.
  2. It is compiled from retail consumer prices in FAO member countries, weighted by their population.
  3. Its commodity-group price indices are combined using the average export shares of those groups over a base period.
  • A. 1, 2 and 3
  • B. 1 and 3 only
  • C. 1 only
  • D. 2 and 3 only

Q5. With reference to the two National Missions on Edible Oils in India, consider the following statements: Which of the statements given above is/are correct?

  1. Oil palm is one of the primary crops of NMEO-Oilseeds, alongside rapeseed-mustard and groundnut.
  2. NMEO-Oil Palm was launched with a special focus on the North-Eastern region and the Andaman and Nicobar Islands.
  3. NMEO-Oilseeds also seeks higher collection and extraction of oil from secondary sources such as cottonseed and rice bran.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 3 only

Q6. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The onset of El Niño conditions tends to put upward pressure on international palm oil prices.
  2. El Niño conditions tend to bring below-normal rainfall to Southeast Asia, the main oil palm-growing region, which hurts production prospects there.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q7. With reference to the effects of an El Niño event on India's edible oil economy, consider the following statements: Which of the statements given above is/are correct?

  1. Every El Niño year since 1950 has been accompanied by below-normal monsoon rainfall in India.
  2. An El Niño event can threaten palm oil output in Southeast Asia and monsoon-dependent kharif oilseeds in India at the same time, adding to price pressure.
  3. By reducing global palm oil output, an El Niño event tends to lower the value of India's edible oil import bill.
  • A. 1, 2 and 3
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 2 only

Q8. A country levies a much lower import duty on crude edible oils than on refined edible oils. Consider the following statements about the likely consequences of this tariff structure: Which of the statements given above is/are correct?

  1. Domestic refining capacity is better used, so the value added by refining stays within the country.
  2. The mix of imports tends to shift towards crude oils and away from refined oils.
  3. Cutting the duty on crude oils alone, with the refined-oil duty left unchanged, increases this protection for domestic refiners.
  • A. 1 and 3 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3