On account of the disruption in education due to the corona pandemic, we're opening up our platform for teachers, free of cost. Know More →

UPSC > Structure of Indian Economy

Explore popular questions from Structure of Indian Economy for UPSC. This collection covers Structure of Indian Economy previous year UPSC questions hand picked by experienced teachers.

Q 1.

Correct2

Incorrect-0.667

Corporation tax:

A

is levied and appropriated by the States

B

is levied by the Union and collected and appropriated by the States

C

is levied by the Union and shared by the Union and the States

is levied by the Union and belongs to it exclusively

Explanation

Corporation tax is a direct tax levied, collected and appropriated by the Union or the central government. No part of this tax can be assigned to the states.

Q 2.

Correct2

Incorrect-0.667

Which of the following constitute the World Bank?
1. International Bank for Reconstruction and Development
2. International Finance Corporation
3. International Development Association
4. International Monetary Fund
Codes:

1, 2 and 3

B

1 and 2

C

3 and 4

D

1, 2, 3 and 4

Explanation

World Bank is made up of two development institutions owned by 187 member countries: International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA). IBRD aims to reduce poverty in middle-income and creditworthy poorer countries, while IDA focuses on world's poorest countries. Their work is complemented by that of the International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA) and International Centre for the Settlement of Investment Disputes (ICSID). There is a difference between the World Bank and the World Bank Group.

Q 3.

Correct2

Incorrect-0.667

Which one of the following is not an instrument of selective credit control in India?

A

Regulation of consumer credit

B

Rationing of credit

C

Margin requirements

Variable cost reserve ratios

Explanation

Variable Reserve Ratio (Cash Reserve Ratio) is aimed to control only volume of credit (quantitative method) not both volume and purpose of credit for which bank gives loans. (Qualitative method and selective control method are used for these purposes. It has a number of limitations.

Q 4.

Correct2

Incorrect-0.667

The Dinesh Goswami Committee was concerned with:

A

de-nationalisation of banks

electoral reforms

C

steps to put down insurgency in the north-east

D

the problem of the Chakmas

Explanation

Dinesh Goswami Committee (1990) was concerned with electoral reforms. It suggested providing state funding in kind to political parties. It also suggested that a candidate should not be allowed to contest election from more than two constituencies.

Q 5.

Correct2

Incorrect-0.667

Bank Rate implies the rate of interest:

A

paid by the Reserve Bank of India on the Deposits of Commercial Banks

B

charged by Banks on loans and advances

C

payable on Bonds

at which the Reserve Bank of India discounts the Bills of Exchange

Explanation

Bank Rate is that rate of interest at which central bank of a country provides refinancing facilities to commercial banks. The bank rate, a benchmark rate at which RBI buys or re-discounts bills of exchange or other commercial papers eligible for purchase. Every bank needs refinancing as it is very difficult to match borrowings and flow of deposits.

Q 6.

Correct2

Incorrect-0.667

Consider the following:
1. Industrial Finance Corporation of India
2. Industrial Credit and Investment Corporation of India
3. Industrial Development Bank of India
4. Unit Trust of India
The correct sequence in which the above were established is:

A

1, 2, 3, 4

B

1, 3, 2, 4

C

4, 3, 2, 1

None of these

Explanation

Best answer should be (1243). IFCI - July 1948; ICICI - 1955; IDBI - UTI - 1963 July 1964

Q 7.

Correct2

Incorrect-0.667

Which of the following were the aims behind the setting up of the World Trade Organization (WTO) ?
1. Promotion of free trade and resource flows across countries
2. Protection of intellectual property rights
3. Managing balanced trade between different countries
4. Promotion of trade between the former East Bloc countries and the western world
Select the correct answer by using the codes given below:
Codes:

A

1, 2, 3 and 4

1 and 2

C

2 and 3

D

1 and 4

Explanation

World Trade Organization (WTO) is a body making global trade rules with binding effects on its members. It is not only an institution, but also a set of agreements. The WTO regime is known as the rules-based multilateral trading system. The history of the Organization dates back to 1947, when the General Agreement on Tariffs and Trade (GATT) was set up to reduce tariffs barriers, remove trade barriers and facilitate international trade in goods and services. Over the years, GATT held eight rounds of multilateral trade negotiations, the last and most extensive being the Uruguay Round (1986-1994). The WTO came into being at Marrakesh in 1995, following the conclusion of the Uruguay Round. Ater this GATT ceased to exist, and its legal texts were incorporated into the WTO as GATT- 1994. The eastern bloc nations have no special status as a member of WTO.

Q 8.

Correct2

Incorrect-0.667

"They are fantastically diverse. They speak hundred of language and dialects. They comprise scores of ethnic groups. They include highly industrialised economics and upcoming economies. They span half the surface of the earth and are home to two-fifths of the world's population." The group of countries referred to here belongs to :

A

SAPTA

APEC

C

EC

D

CIS

Explanation

APEC is the group of 21 countries. APEC is short for Asia Pacific Economic Cooperation. This group of countries span half the surface of the earth and are home of 2/5th of the world's population. Indian request for membership is pending.

Q 9.

Correct2

Incorrect-0.667

The sum of which of the following constitutes Broad Money in India?
1. Currency with the public
2. Demand deposits with banks
3. Time deposits with banks
4. Other deposits with RBI
Choose the correct answer using the codes given below:

A

1 and 2

B

1, 2 and 3

1, 2, 3 and 4

D

1, 2 and 4

Explanation

Narrow money is the most liquid part of the money supply because the demand deposits can be withdrawn anytime during the banking hours. Time deposits on the other hand have a fixed maturity period and hence cannot be withdrawn before expiry of this period. When we add the time despots into the narrow money, we get the broad money, which is denoted by M3. M3 = Narrow money + Time Deposits of public with banks. We note here that the Broad money does not include the interbank deposits such as deposits of banks with RBI or other banks. At the same time, time deposits of public with all banks including the cooperative banks are included in the Broad Money.

Q 10.

Correct2

Incorrect-0.667

The accounting year of the Reserve Bank of India is:

A

April-March

July-June

C

October-September

D

January-December

Explanation

The central bank's accounting year runs from July 1 to June 30. On 11 Mar, 1940, RBI Accounting Year changed from Jan-Dec to July-June.

Q 11.

Correct2

Incorrect-0.667

Economic Survey in India is published officially, every year by the:

A

Reserve Bank of India

B

Planning Commission of India

Ministry of Finance, Govt. of India

D

Ministry of Industries, Govt. of India

Explanation

Economy Survey in India is published officially, every year by the Ministry of Finance, Govt. of India. and issued before the annual budget. It reviews the development in the Indian economy over the previous 12 months.

Q 12.

Correct2

Incorrect-0.667

The farmers are provided credit from a number of sources for their short and long term needs. The main sources of credit to the farmers include:

the Primary Agricultural Cooperative Societies, commercial banks, RRBs and private money lenders

B

the NABARD, RBI, commercial banks and private money lenders

C

the District Central Cooperative Banks (DCCB), the lead banks, IRDP and JRY

D

the Large Scale Multi-purpose Adivasis Programme, DCCB, IFFCO and commercial banks

Explanation

Regional rural banks were established under RRB Act 1976. They provide credit to agriculture and other rural activities. As of March 2014, the number of RRBs has been reduced to 57.

Q 13.

Correct2

Incorrect-0.667

Match List-I with List-II and select the correct answer using the codes given below the lists:

List-IList-II
A. WTO 1. Provides loans to address shortterm balance payment problems
B. IDA 2. Multilateral trade negotiation body
C. IMF 3. Sanction of soft loans
D. IBRD 4. Facilitating lending and borrowing for reconstruction and development

Codes:

A

A- 2; B - 3; C - 4; D -1

A- 2; B - 3; C - 1; D -4

C

A- 3; B - 2; C - 4; D -1

D

A- 3; B - 2; C - 1; D -4

Explanation

In 1995, the World Trade Organization (WTO) replaced the GATT as the administrative body. A current round of multilateral trade negotiations was conducted in the Doha Development Agenda round. IDA as an agency to provide 'soft-loans' to developing countries, was floated within the Bank under the stewardship of President Eugene Black. Historically, the bulk of non-concessional IMF assistance has been provided through SBAs. The SBA is designed to help countries address short-term balance of payments problems. Most of IBRD's lending generally falls under two categories: investment project financing and development policy operations.

Q 14.

Correct2

Incorrect-0.667

The Employment Assurance Scheme envisages financial assistance to rural areas for guaranteeing employment to at least:

A

50 percent of the men and women seeking jobs in rural areas

B

50 percent of the men seeking jobs in rural areas

one man and one woman in a rural family living below the poverty line

D

one person in a rural landless household living below the poverty line

Explanation

Employment Assurance Scheme was launched on 2nd October, 1993 for implementation in 1778 identified backward blocks of different States. Later, the scheme was extended to the remaining blocks of the country in a phased manner. At present, the scheme is being implement in all the rural blocks of the country. The programme has been restructured from 1.4.99. The primary objective of the EAS is to provide gainful employment during the lean agricultural season to all able bodied adults in rural areas who are in need and desirous of work, but cannot find work. The secondary objective is the creation of community, social and economic assets for sustained employment and development. Internal debt comprises loans raised in the open markets. It also includes borrowings through treasury bills issued to State Government.

Q 15.

Correct2

Incorrect-0.667

Assertion (A) : During the year 2001-02, the value of India's total exports declined, registering a negative growth of 2.17 %.
Reason (R) : During the year 2001-02, negative growth in exports was witnessed in respect of iron and steel, coffee, textiles and marine products.

A

Both A and R are individually true and R is the correct explanation of A

B

Both A and R are individually true but R is not the correct explanation of A

C

A is true but R is false

A is false but R is true

Explanation

During the year 2001-02, there was a decline of 1.6% and not 2.17% in Indian exports.

Q 16.

Correct2

Incorrect-0.667

Consider the following statements:
1. Sensex is based on 50 of the most important stocks available on the Bombay stock Exchange (BSE).
2. For calculating the Sensex, all the stock are assigned proportional weightage.
3. New York Stock Exchange is the oldest stock exchange in the world.
Which of the statements given above is/are correct?

2 only

B

1 and 3

C

2 and 3

D

none

Explanation

The 'BSE SENSEX' is a value-weighted index composed of 30 stocks and was started in 1 January, 1986. The origin of the NYSE can be traced to 17 May, 1792. When the Buttonwood Agreement was signed by 24 stock brokers outside 68 Wall Street in New York under a buttonwood tree. Amsterdam stock exchange (1602) is considered oldest in the world and was established by the Dutch East India company.

Q 17.

Correct2

Incorrect-0.667

Assertion (A): Balance of Payments represents a better Picture of a country economic transactions with the rest of the world than the Balance of Trade Balance of Payments takes into account
Reason (R): The exchange of both visible and invisible items whereas balance of Trade does not.

Both 'A' and 'R', are individually true and 'R' is the correct explanation of 'A'.

B

Both 'A' and 'R' are individually true but 'R' is not the, correct explanation of 'A' .

C

'A' is true but 'R' is false.

D

'A' is false but 'R' is true.

Explanation

Balance of payments of a nation consists of visible account, invisible account and capital account. Whereas balance of trade = Export of goods - import of goods. If a country imports are more than exports the deficit can be made up by invisibles like remmitance by NRI and FDI investment.

Q 18.

Correct2

Incorrect-0.667

Which one of the following Indian banks is not a nationalized bank?

A

Corporation Bank

B

Dena Bank

Federal Bank

D

Vijaya Bank

Explanation

Federal Bank is a major Indian commercial bank in the private sector, headquartered at Kochi, Kerala.

Q 19.

Correct2

Incorrect-0.667

Consider the following statements:
1. Life Insurance Corporation of India is the oldest insurance company in India.
2. National Insurance Company Limited was nationalized in the year 1972 and made a subsidiary of General Insurance Corporation of India.
3. Headquarters of United Indian Insurance Company Limited are located at Chennai.
Which of the statements given above are correct?

A

1, 2 and 3

B

1 and 2 only

2 and 3 only

D

1 and 3 only

Explanation

Oriental Life Insurance company (1818) is the oldest.

Q 20.

Correct2

Incorrect-0.667

Consider the following statements:
1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India.
2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?

1 only

B

2 only

C

Both 1 and 2

D

Neither 1 nor 2

Explanation

Repo Rate is the rate at which commercial banks borrow funds from RBI. A reduction in the repo rate will help banks to get money from the central bank at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. A value of (0) for Gini Coefficient in a country implies that there is perfect equality in the system. If the value is 1 then there is complete inequality in the country.

Q 21.

Correct2

Incorrect-0.667

Which one of the following sets of commodities are exported to India by arid and semi-arid countries in the Middle East?

A

Raw wool and carpets

Fruits and palm oil

C

Precious stones and pearls

D

Perfume and Coffee.

Explanation

Fruits and palm oil are exported to India by arid and semi arid countries of middle east.

Q 22.

Correct2

Incorrect-0.667

With reference to India, consider the following:
1. Nationalization of Banks
2. Formation of Regional Rural Banks
3. Adoption of villages by Bank Branches
Which of the above can be considered as steps taken to achieve the "financial inclusion" in India?

A

1 and 2 only

B

2 and 3 only

C

3 only

1, 2 and 3

Explanation

Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. Unrestrained access to public goods and services is the sine qua non of an open and efficient society. Banking services are in the nature of public good. It is essential that availability of banking and payment services be available to the entire population without discrimination. This is the prime objective of the government.

Q 23.

Correct2

Incorrect-0.667

The basic aim of Lead Bank Scheme is that

A

big banks should try to open offices in each district

B

there should be stiff competition among the various nationalized banks

individual banks should adopt particular districts for intensive development

D

all the banks should make intensive efforts to mobilize deposits

Explanation

The basic aim of Lead Bank scheme is that the bank should adopt particular districts for intensive development by offering loans and banking services.

Q 24.

Correct2

Incorrect-0.667

What does venture capital mean?

A

A short-term capital provided to industries

A long-term start-up capital provided to new entrepreneurs

C

Funds provided to industries at times of incurring losses

D

Funds provided for replacement and renovation of industries

Explanation

Venture capital (VC) is a long term financial capital provided to early-stage, high-potential, growth startup companies or new companies.

Q 25.

Correct2

Incorrect-0.667

With reference to Indian economy, consider the following
1. Bank rate
2. Open market operations
3. Public debt
4. Public revenue
Which of the above is/are component/ components of Monetary Policy?

A

1 only

B

2, 3 and 4

1 and 2

D

1, 3 and 4

Explanation

The RBI implements the monetary policy through open market operations, bank rate policy, reserve system, credit control policy, moral persuasion and through many other instruments.