Indian Economy Questions and Answers

Answer: A

NABARD is a bank.

The National Bank for Agriculture and Rural Development is an apex development financial institution, established by an Act of Parliament in 1981. It refinances rural lending by co-operatives, regional rural banks and commercial banks rather than lending directly to farmers.

Answer: D

It was established at Surat.

The Surat Export Processing Zone at Sachin was the first in the private sector, developed by the Diamond Park promoters in Gujarat, in a state whose diamond and textile trades dominate its exports.

Answer: A

Handloom is the most important small-scale industry.

It is the largest cottage industry in India and, after agriculture, the largest source of rural employment, supporting several million weavers. Its output is protected by reservation of certain fabrics under the Handloom Reservation Act.

Answer: A

China produces the most tea.

It grows roughly 40 per cent of the world's tea, well ahead of India's quarter. India is nonetheless the largest producer of black tea and the largest consumer of tea in the world, since most of its crop is drunk at home; Kenya leads in exports.

Answer: C

The Life Insurance Corporation was established in 1956.

Life insurance was nationalised that year and the business of 245 insurers was transferred to the new corporation. The industry was reopened to private participation only in 2000.

Answer: C

The rise has been almost continuous since 1939.

The Second World War brought heavy government spending, shortages and a sharp increase in money supply, and the price level has scarcely fallen in any year since. India has not had a sustained deflation in over eighty years.

Answer: C

Core industries are the critical industries.

The eight core industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - supply inputs to the rest of the economy and carry about 40 per cent of the weight of the index of industrial production, which is why their output is watched as a leading indicator.

Answer: A

The bank rate is the rate at which the RBI gives credit to commercial banks.

It is the rate at which the central bank rediscounts eligible bills or lends without collateral. Raising it makes borrowing from the RBI dearer, so banks raise their own lending rates and credit contracts. The repo rate has since become the operative policy rate.

Answer: A

Its object was to train rural youth for self-employment.

TRYSEM, launched in 1979, trained rural young people aged 18 to 35 from families below the poverty line in a trade, and linked the training to credit under the IRDP so that they could set up on their own.

Answer: D

Sales tax is not a direct tax.

Its burden is passed on to the buyer in the price, which is what makes a tax indirect. Wealth tax, corporation tax and estate duty all fall on the person assessed and cannot be shifted.