Indian Economy Questions and Answers

Answer: B

This is the Statutory Liquidity Ratio.

Every bank must hold a prescribed proportion of its net demand and time liabilities in cash, gold or approved securities. Raising the SLR leaves less for lending and so contracts credit. The Cash Reserve Ratio, kept with the RBI in cash, is the companion instrument.

Answer: B

Defence spending is an item of national security.

In the budget it falls under non-development expenditure, since it adds nothing directly to productive capacity. It is nonetheless among the largest single heads of central expenditure.

Answer: D

Indirect taxes contribute about 86 per cent of the combined tax revenue.

Taking the Centre and the states together, the great bulk of tax revenue has historically come from indirect taxes - excise, customs, sales tax and now GST. This makes the Indian tax structure regressive, since indirect taxes fall on rich and poor alike as a proportion of what they spend.

Answer: B

Grapevine refers to informal communication.

It is the unofficial network through which news, rumour and opinion travel in an organisation, cutting across the formal hierarchy. It is fast and hard to control, and managers who ignore it lose a useful reading of morale.

Answer: B

They were also issued in Deutsche marks.

Resurgent India Bonds were floated by the State Bank of India in 1998, after the sanctions that followed the Pokhran tests, to attract foreign exchange from non-resident Indians. They were denominated in US dollars, pounds sterling and Deutsche marks, and raised about $4.2 billion.

Answer: B

Essar Oil signed the accord.

It was the first Indian private company to obtain exploration rights in Myanmar's offshore blocks, entering a field where ONGC Videsh and GAIL were already present as public sector players.

Answer: C

The Fourth Plan is called the Gadgil Yojana.

It was drafted under D.R. Gadgil, then Deputy Chairman of the Planning Commission, and ran from 1969 to 1974 with the aim of 'growth with stability'. Gadgil also gave his name to the formula for distributing central assistance among the states.

Answer: D

The value added is Rs 400.

\[\text{Value added} = \text{output} - \text{intermediate consumption}\]

Copper and other materials are intermediate goods; wages are a factor payment and part of the value added, not a deduction.

\[1000 - (500 + 100) = 400\]

Answer: C

Corporate tax is imposed by the Central Government.

Taxes on income other than agricultural income fall in the Union List, so only Parliament may levy them. The proceeds are shared with the states under the Finance Commission's award.

Answer: D

This is the quorum.

It is the minimum number of members whose presence makes a meeting valid, so that decisions cannot be taken by a handful. Business transacted without a quorum is void. An agenda is the list of items and a motion a proposal put to the meeting.