Indian Economy MCQs

Notes:
Muriate of potash is a common name for potassium chloride. It is chemically neutral and does not significantly alter soil pH. Farmers use it mainly as a source of potassium. Urea and ammonia may acidify soil with repeated use, while rock phosphate tends to make soil slightly acidic over time. Muriate of potash is widely produced and used worldwide.

Notes:
Kudankulam Nuclear Power Plant in Tamil Nadu remains India’s largest by capacity, with Units 1 and 2 each at 1,000 MWe (total 2,000 MW operational). While India’s total nuclear capacity is now around 8,780-8,880 MW across 24-25 reactors as of early 2026, no other station exceeds Kudankulam’s installed capacity; Units 3 and 4 (1,000 MWe each) are under construction for 2026 completion, further expanding it to 4,000 MW. Tarapur (1,400 MW), Kakrapar (~1,400 MW with recent 700 MWe units), and Kaiga (880 MW) are smaller. 

Notes:
The process of laundering money generally involves three steps: placement, layering, and integration. Placement refers to injecting the “dirty money” into the legitimate financial system. Layering conceals the source of the money through a series of transactions and bookkeeping tricks. in Integration, the now-laundered money is withdrawn from the legitimate account to be used for desired purposes.

Notes:
Dematerialization converts physical securities into electronic format held in demat accounts. In India, this process is regulated by SEBI. Compulsory dematerialization for listed companies began in 1996 and for private companies from October 27, 2023. Investors must open demat accounts with SEBI-registered Depository Participants. Dematerialization reduces risks related to theft and forgery and enables faster settlements.

Notes:
The BSE SENSEX consists of 30 large, actively traded stocks. As of January 2026, BSE’s total market capitalization was approximately $5,001.331 billion. Historically, SENSEX 30 stocks account for around 30% of the BSE’s total market capitalization. The SENSEX was established in 1986 and is the primary benchmark index of the Bombay Stock Exchange.

Notes:
The shadow banking system comprises non-banking financial companies, investment banks, and hedge funds. These entities conduct credit intermediation and liquidity services outside traditional, regulated banking channels. Shadow banking entities do not have access to central bank liquidity or deposit insurance. The Financial Stability Board monitors shadow banking to assess systemic risk. Scheduled commercial banks are not part of the shadow banking system, as they operate under stricter regulation.

Notes:
Margin requirements ensure investors maintain a minimum equity percentage in their accounts. Initial margin is set before a trade, and maintenance margin must be upheld throughout. If equity falls below the maintenance margin, a margin call is issued. This system aims primarily to protect brokers and lenders from losses if securities lose value. U.S. regulations on margin trading are set by the Federal Reserve Board under Regulation T.

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The Reserve Bank of India regulates foreign currency accounts and remittances for Indian residents. RBI acts under the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2015. Amendments until 2025 empower RBI to set conditions for outward and inward remittance and opening of overseas bank accounts. RBI issues notifications for compliance with FEMA rules.

Notes:
The fiscal deficit may be decomposed into primary deficit and interest payment. The primary deficit is obtained by deducting interest payments from the fiscal deficit. Thus, primary deficit is equal to fiscal deficit less interest payments. It indicates the real position of the government finances as it excludes the interest burden of the loans taken in the past.

Notes:
The Central Board of Indirect Taxes and Customs (CBIC) was renamed in 2018 from CBEC. CBIC is a statutory body under the Department of Revenue, Ministry of Finance. It is responsible for administration of GST, customs, excise and service tax in India. The board was originally established in 1964 by the Central Boards of Revenue Act, 1963.