Indian Economy MCQs
Indian Economy Multiple Choice Questions (MCQs) for SSC, State and all One Day Examinations of India. Objective Questions on Indian Economy for competitive examinations.
1. Which of the following currencies is not included in the Special Drawing Rights (SDR) Currency Basket?
[A] Indian Rupee
[B] British Pound
[C] Japanese Yen
[D] Chinese Renminbi
Show Answer
Correct Answer: A [Indian Rupee]
Notes:
The SDR basket now consists of the following five currencies: U.S. dollar 41.73%, Euro 30.93%, Renminbi (Chinese Yuan) 10.92%, Japanese Yen (8.33%), British Pound (8.09%).
2. Which is called the “Soft Loan Window” of the World Bank?
[A] International Monetary Fund
[B] International Finance Corporation
[C] International Development Association
[D] World Trade Organization
Show Answer
Correct Answer: C [International Development Association]
Notes:
The International Development Association (IDA) was established in 1960 as part of the World Bank Group. IDA offers highly concessional loans and grants to the world’s poorest countries. As of fiscal year 2025, IDA has provided $600 billion to 116 countries. Its concessional loans typically have repayment periods of up to 40 years with long grace periods and low or zero interest.
3. SIDBI was established as a subsidiary of which institution in 1990?
[A] Industrial Investment Bank of India Ltd
[B] Industrial Finance Corporation of India
[C] Reserve Bank of India
[D] Industrial Development Bank of India
Show Answer
Correct Answer: D [Industrial Development Bank of India]
Notes:
SIDBI was established on April 2, 1990, as a wholly owned subsidiary of the Industrial Development Bank of India (IDBI) under an Act of Parliament. SIDBI acts as the principal financial institution for promoting, financing, and developing the Micro, Small, and Medium Enterprises (MSME) sector in India. SIDBI’s headquarters are in Lucknow, Uttar Pradesh.
4. Which term is not formally linked with Indian government budgets?
[A] Outcome Budget
[B] Gender Budget
[C] Austerity Budget
[D] Performance Budget
Show Answer
Correct Answer: C [Austerity Budget]
Notes:
Austerity Budget is not an official budget type in India. Outcome Budget was introduced in 2005 to link allocations with measurable results. Gender Budget was initiated in 2005-06 for women’s development. Performance Budget allocates funds based on achievements. The Indian Union Budget officially includes Outcome, Gender, and Performance Budgets, but not Austerity Budget.
5. Which was NOT a stipulated target in the FRBM Act, 2003?
[A] Elimination of revenue deficit
[B] Reduction of fiscal deficit to 3% of GDP
[C] Limiting government guarantees to 0.5% of GDP
[D] Complete elimination of primary deficit
Show Answer
Correct Answer: D [Complete elimination of primary deficit]
Notes:
The FRBM Act, 2003 mandated elimination of revenue deficit, reduction of fiscal deficit to 3% of GDP, and limitation of government guarantees. The Act did not stipulate complete elimination of the primary deficit as a statutory target. The focus was on fiscal and revenue deficit reduction. The 2018 amendment revised several targets but did not mandate elimination of the primary deficit as a statutory requirement.
6. What is a key feature of Interval Funds in financial markets?
[A] Provide capital appreciation over the medium to long-term
[B] Invest half in stock and half in commodity market
[C] Provide both growth and regular income
[D] Offer redemption at intervals with continuous share purchases
Show Answer
Correct Answer: D [Offer redemption at intervals with continuous share purchases]
Notes:
Interval funds are a hybrid of open-ended and closed-ended funds. They allow continuous purchases but restrict redemptions to specific intervals, usually monthly or quarterly. Redemptions are permitted only during these fixed periods. The Securities and Exchange Commission (SEC) regulates these funds in the United States. Interval funds are different from daily-liquid mutual funds.
7. Which is the largest component of India’s foreign exchange reserves?
[A] Gold
[B] Foreign Currency Assets
[C] SDR
[D] Reserve Tranche with IMF
Show Answer
Correct Answer: B [Foreign Currency Assets]
Notes:
As of November 14, 2025, Foreign Currency Assets amounted to USD 562.29 billion. India’s total foreign exchange reserves reached USD 717.06 billion on February 6, 2026. Foreign Currency Assets typically comprise 78-82% of the country’s forex reserves. Other components such as gold, SDRs, and Reserve Tranche with IMF form a much smaller proportion of the total reserves.
8. What do we call the funds that the banks keep with RBI as a portion of their Net Demand and Time Liabilities?
[A] Statutory Liquidity Ratio
[B] Cash Reserve Ratio
[C] Bank Rate
[D] Reverse Repo Rate
Show Answer
Correct Answer: B [Cash Reserve Ratio]
Notes:
The Cash Reserve Ratio is the amount of funds that the banks are bound to keep with Reserve bank of India as a portion of their Net Demand and Time Liabilities (NDTL).
9. Which of these is not a Maharatna company as of 2026?
[A] Coal India Limited
[B] Steel Authority of India Limited
[C] Bharat Electronics Limited
[D] Hindustan Aeronautics Limited
Show Answer
Correct Answer: C [Bharat Electronics Limited]
Notes:
Bharat Electronics Limited is classified as a Navratna company. Maharatna scheme was introduced in 2010. As of 2026, there are 14 Maharatna companies including Coal India Limited, Steel Authority of India Limited, and Hindustan Aeronautics Limited. Hindustan Aeronautics Limited received Maharatna status in October 2024. Bharat Electronics Limited has not been granted Maharatna status.
10. In which of the following market forms a firm does not exercise control over price?
[A] Monopoly
[B] Mixed Competition
[C] Perfect competition
[D] Oligopoly
Show Answer
Correct Answer: C [Perfect competition]
Notes:
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
