Exams › SSC CGL (Prelims) › General › Indian Economy
59 questions with worked solutions.
Q1. Which program enables postmen to deliver financial services?
Answer: IPPB
India Post Payments Bank (IPPB) was launched to provide banking and financial services through the postal network. It uses postmen and post offices to improve financial inclusion, especially in rural areas.
Q2. Assertion (A): GST is a destination-based tax. Reason (R): GST is levied only on manufacturing.
Answer: A is true, but R is false
GST is a destination-based tax, meaning it is collected where the goods or services are consumed. The reason is false because GST is not levied only on manufacturing; it applies to the supply of goods and services across stages.
Q3. The dependency ratio refers to:
Answer: Ratio of dependent population to working population
The dependency ratio measures the burden on the working-age population by comparing dependents (usually children and the elderly) to the working-age population. It is an important demographic indicator.
Q4. Which statement highlights a key feature of India's IT industry?
Answer: Strong global outsourcing presence
India's IT industry is globally recognized for software services and outsourcing. A major feature is its strong presence in international outsourcing and IT-enabled services markets.
Q5. The National Food Security Act primarily aims to:
Answer: Provide subsidized food grains
The National Food Security Act, 2013 aims to provide subsidized food grains to eligible beneficiaries under the public distribution system. Its primary focus is food security and nutrition support.
Q6. Which of the following statements about India’s cement industry is correct?
Answer: It is one of the largest producers in the world.
India is among the largest producers of cement in the world. The industry uses domestic raw materials and is not limited to coastal states or only public sector units.
Q7. Operation Flood is associated with:
Answer: Milk production (White Revolution)
Operation Flood was the world's largest dairy development programme and is associated with the White Revolution in India. It transformed India into a leading milk producer. Therefore, the correct answer is milk production.
Q8. The Gini Coefficient is a measure of:
Answer: Income inequality
The Gini Coefficient is a statistical measure used to represent income or wealth inequality within a population. A value of 0 indicates perfect equality, while 1 indicates maximum inequality. Hence, the correct answer is income inequality.
Q9. In the context of the Indian economy, ‘liquidity trap’ refers to a situation where:
Answer: People prefer to hold cash despite low interest rates
A liquidity trap occurs when interest rates are very low, but people still prefer holding cash instead of investing or spending. In such a case, monetary policy loses effectiveness. Therefore, the correct option is the one about preferring cash despite low interest rates.
Answer: Both A and R are true, and R is the correct explanation of A
The National Single Window System is designed to simplify business approvals by providing a single platform for various clearances. Since it integrates approvals from multiple ministries, the reason correctly explains the assertion. Therefore, both statements are true and R explains A.
Q11. Joint sector enterprises involve:
Answer: Government and private ownership together
A joint sector enterprise is owned and managed jointly by the government and private investors. It combines public control with private participation.
Answer: Both A and R are true and R is the correct explanation of A.
The New Industrial Policy, 1991 did reduce the role of industrial licensing in India. This was because it was designed to promote liberalization, privatization, and greater private sector participation. Hence, both statements are true and the reason correctly explains the assertion.
Answer: Space Economy
In the Union Budget 2024–25, the Space Economy received a notable increase in allocation to support innovation and growth under the Viksit Bharat vision. This sector was emphasized as an emerging area with high strategic importance.
Q14. The PM Gati Shakti initiative primarily aims at:
Answer: Integrated infrastructure planning
PM Gati Shakti is a national master plan for integrated infrastructure planning and coordinated execution. It aims to improve logistics, connectivity, and reduce project delays.
Answer: Both A and R are true and R explains A
Both the assertion and reason are true. In the early Five-Year Plans, the public sector was given a leading role because private capital was insufficient to meet the needs of planned development.
Q16. The First Five-Year Plan emphasized:
Answer: Agriculture and irrigation
The First Five-Year Plan (1951–56) gave priority to agriculture, irrigation, and power because India needed to increase food production and stabilize the economy. Heavy industry became a bigger focus in later plans.
Q17. The term BOP refers to balance of:
Answer: Payments
BOP stands for Balance of Payments. It is a record of all economic transactions between residents of a country and the rest of the world.
Q18. Which scheme focuses on crop insurance?
Answer: PMFBY
PMFBY stands for Pradhan Mantri Fasal Bima Yojana, which is the Government of India’s crop insurance scheme. The other options relate to infrastructure, entrepreneurship, and manufacturing. Therefore, PMFBY is correct.
Q19. Golden visa programs are criticized because they:
Answer: Allow money laundering risks
Golden visa programs can be criticized because they may allow individuals to obtain residency through investments with insufficient checks on the source of funds. This creates risks of money laundering and illicit financial flows. Hence, the correct answer is Allow money laundering risks.
Answer: 1956
The Industrial Policy Resolution of 1956 classified industries into Schedule A, B, and C and laid down a stronger role for the public sector. It is a landmark policy in India’s planned economic development. Therefore, the correct year is 1956.
Answer: Both A and R are true, and R explains A
Liberalization did reduce import licensing by easing government controls on trade. The reason is also true because one major objective of liberalization was to integrate the economy with global markets, which explains the reduction in licensing.
Q22. Fiscal policy deals with:
Answer: Government revenue and expenditure
Fiscal policy refers to the government's use of taxation and expenditure to influence the economy. Interest rates and exchange rates are not part of fiscal policy; they are linked more to monetary and external sector policy.
Q23. Privatization refers to transfer of ownership from:
Answer: Public to private
Privatization means transferring ownership or management of enterprises from the public sector to the private sector. It is commonly used to improve efficiency and reduce the government's direct role in business.
Answer: Coexistence of public and private sectors
A mixed economy combines features of both public and private ownership. In such an economy, government and private sectors coexist and participate in economic activities.
Answer: Both A and R are true and R is the correct explanation of A.
Both statements are true. Disinvestment means reducing government stake in public sector enterprises, and such moves often lead to debate because they affect ownership, employment, and public control.
Q26. Entry of MNCs is linked with:
Answer: Liberalisation
The entry of multinational companies is associated with liberalisation because it reduces government controls and allows greater foreign participation in the economy. Nationalisation and protectionism are opposite ideas.
Answer: Fifth Plan
The Twenty-Point Programme was first introduced in 1975 during the Fifth Five-Year Plan. It was aimed at poverty alleviation, better living standards, and economic reforms.
Answer: To regulate and control private sector expansion
Industrial licensing was introduced to regulate the establishment and expansion of industries in the private sector. It was used to control concentration of economic power and align industrial growth with national planning.
Answer: To achieve self-reliance and rapid industrialization
The Second Five-Year Plan emphasized heavy industries to build a strong industrial base, especially capital goods industries. This was intended to promote self-reliance and accelerate industrialization.
Q30. Which of the following is another name for the capital account of the government budget?
Answer: Capital budget
The capital account of the government budget is also called the capital budget. It includes receipts and expenditures that create assets or liabilities.
Q31. Why was the 'Import Substitution' strategy adopted in India's industrial policy during 1950–1980?
Answer: To protect domestic industries from foreign competition
Import substitution was adopted to reduce reliance on foreign goods and nurture Indian industries in their early stages. By limiting imports and encouraging local production, the government sought to protect domestic firms from stronger foreign competition.
Q32. Which statement best reflects the outcome of land reforms in India between 1950 and 1970?
Answer: Intermediaries were abolished but tenancy reforms varied by state
During the early decades after independence, India implemented land reforms that abolished intermediaries in many regions. However, tenancy reforms, ceilings, and redistribution measures differed significantly from state to state.
Answer: It promoted competition and efficiency in the private sector
The 1991 LPG reforms reduced excessive government control, opened the economy, and encouraged private and foreign participation. This led to greater competition and improved efficiency in many sectors.
Q34. In the context of Indian planning history, the "Rolling Plan" was introduced by which government?
Answer: The Janata Government
The Rolling Plan was introduced by the Janata Government. It replaced the existing planning framework for a short period and was later discontinued when the political situation changed.
Answer: Second Five Year Plan
The Second Five Year Plan gave importance to the Industrial Policy Resolution of 1956. It stressed the role of the public sector in controlling the 'commanding heights' of the economy, especially heavy industries.
Q36. What was the major short-term objective of the stabilization measures in the 1991 reforms?
Answer: Control inflation and restore balance of payments
The stabilization package in 1991 was designed to deal with the immediate economic crisis. Its short-term aim was to control inflation and restore balance of payments stability, while structural reforms addressed longer-term changes.
Q37. Why are grants for asset creation still considered revenue expenditure?
Answer: They do not create direct central assets
Grants for asset creation may lead to assets being created in the hands of another entity, but they do not create direct assets for the central government. Therefore, they are treated as revenue expenditure in budget classification.
Q38. The rolling plan concept was introduced during which Prime Minister's tenure?
Answer: Morarji Desai
The rolling plan concept was introduced during Morarji Desai's tenure. It replaced the fixed five-year framework with a more flexible and continuously revised planning approach.
Q39. What is the central theme of the book *The Tatas* by Girīśa Kubera and Vikrant Pande?
Answer: The Tata family's role in building Indian industry and society
The book *The Tatas* centers on the Tata family's contribution to India's industrial growth and social development. It is about their role in shaping industry and society, not a fictional story or a narrow policy study.
Q40. What was the central theme of the Industrial Policy Resolution of 1956?
Answer: State control of the commanding heights of the economy
The Industrial Policy Resolution of 1956 gave the state a dominant role in key industries and aimed at controlling the commanding heights of the economy. It is a landmark policy in India's planned economic development.
Q41. The Planning Commission was established in which year?
Answer: 1950
The Planning Commission of India was established in 1950. It played a central role in India’s planned economic development until it was replaced by NITI Aayog.
Answer: A is true but R is false
The 1991 economic reforms did open the Indian economy to foreign investment, so Assertion (A) is true. However, the reason given is false because the reforms were mainly introduced to address the balance of payments crisis and improve efficiency, not simply to raise domestic savings rapidly.
Q43. Which of the following best defines capital receipts?
Answer: Receipts that create liability or reduce government assets
Capital receipts are those receipts that either create a liability for the government or reduce its assets. Examples include borrowings and recovery of loans. They are different from revenue receipts, which do not create liabilities.
Q44. Which sectors were largely excluded from industrial licensing after 1991?
Answer: Textiles and Fertilizers
After the 1991 industrial policy reforms, industrial licensing was largely abolished for most industries, with only a few sectors remaining restricted. Textiles and fertilizers were generally outside the licensing requirement compared with heavily controlled sectors like alcohol, cigarettes, and explosives.
Q45. The Lead Bank Scheme was introduced in which year?
Answer: 1969
The Lead Bank Scheme was introduced in 1969 to improve the spread of banking services across districts. It assigned a lead bank to coordinate credit planning and development in each district.
Answer: To boost domestic manufacturing and attract investments
The PLI scheme gives incentives to companies based on incremental production, encouraging firms to manufacture more in India. Its main aim is to strengthen domestic manufacturing and bring in investment.
Q47. What was the main focus of the First Five-Year Plan?
Answer: Agriculture
The First Five-Year Plan (1951–56) mainly focused on agriculture, irrigation, and basic infrastructure. It aimed to stabilize the economy and address food shortages after Independence.
Q48. The economic policy reforms of 1991 are popularly known as:
Answer: New Economic Policy
India's 1991 economic reforms are commonly called the New Economic Policy. These reforms introduced liberalisation, privatisation, and globalisation to address the balance of payments crisis and modernise the economy.
Answer: Both A and R are true, and R is the correct explanation of A
Revenue receipts are the government's regular income and do not create a liability to repay. Since they come from tax and non-tax sources and are not borrowed funds, the reason correctly explains the assertion.
Q50. Who is known as the architect of India's Five-Year Plans?
Answer: P.C. Mahalanobis
P.C. Mahalanobis is regarded as the architect of India's Five-Year Plans because of his major role in designing the planning model, especially for the Second Five-Year Plan. His statistical and economic framework shaped early Indian planning.