Indian Economy Questions and Answers

Answer: C

The rolling plan covered 1978 to 1983.

The Janata government scrapped the Fifth Plan a year early and adopted the rolling plan proposed by Gunnar Myrdal, in which the plan is revised every year and rolled forward. The Congress government abandoned it in 1980.

Answer: A

Devaluation is a reduction in the value of a currency against major international currencies.

It is a deliberate act by the authorities under a fixed or managed exchange rate, and it makes exports cheaper abroad and imports dearer at home. India devalued in 1949, 1966 and 1991. A market-driven fall is called depreciation, not devaluation.

Answer: D

The basic functions are all of these.

Every economy must decide what to produce and how, how much to set aside as investment rather than consume, and how to distribute what is produced. Production, consumption and investment are the three activities through which those decisions take effect.

Answer: B

Sales tax is an indirect tax.

The dealer pays it to the government but recovers it from the buyer in the price, so the burden is shifted - which is what makes a tax indirect. It was levied by the states and has now been subsumed into the state GST.

Answer: B

Both are true, but (R) is not the correct explanation of (A).

India is a developing economy, and disguised unemployment - more people working on a farm than the work requires, so that the marginal product of some is near zero - is certainly present. But it is a symptom of underdevelopment rather than the reason for the classification, which rests on per capita income and structure.

Answer: B

Central assistance for state and UT plans is not non-plan expenditure.

It was plan expenditure by definition, being the Centre's contribution to the states' plan outlays. Subsidies, defence and interest payments were all non-plan. The plan and non-plan classification was itself dropped from the budget in 2017.

Answer: C

SEBI was established in 1988.

It was set up by a government resolution as a non-statutory body, and was given statutory powers by the SEBI Act of 1992 after the securities scam of that year. It regulates the securities market and protects investors.

Answer: D

Statements I and II are true.

Regional rural banks operate within a notified district or group of districts, and draw refinance from NABARD on concessional terms. They were originally meant to lend only to weaker sections, but that restriction was relaxed in 1996 so that they could lend to any borrower and remain viable.

Answer: B

The Prime Minister chairs the National Development Council.

All Chief Ministers, the administrators of Union Territories and the Union Cabinet ministers are members, with the Secretary of the Planning Commission as secretary. It was the forum in which a plan received the states' assent.

Answer: B

EXIM Bank was established in 1982.

The Export-Import Bank of India began operations on 1 January 1982, taking over the international finance wing of IDBI. It finances and promotes India's foreign trade, and extends lines of credit to overseas buyers of Indian goods.