Indian Economy MCQs

Notes:
A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such tax does not take into account the ability to pay.

Notes:
Please note the 3 trigger points that invite RBI to take Prompt Coercive Actions against Banks. They are low capital adequacy ratio, high non performing assets and low profit.

Notes:
Deficit financing involves government spending exceeding revenue, often used to stimulate economic growth. J.M. Keynes advocated for this approach during the Great Depression, arguing it could boost demand and reduce unemployment. While it can create jobs and mitigate economic downturns, it can also lead to increased national debt and inflation if mismanaged. Therefore, the statement “All are correct” is incorrect because it implies that deficit financing is universally beneficial without acknowledging potential drawbacks.

Notes:
When a government meets the gap between public expenditure and public revenue by printing new currency, it is called deficit financing. Deficit financing is the process of generating funds to cover the gap between expenditure and revenue.

Notes:
The correct answer is “Both 1 & 2 are correct.” 1. The G-sec (Government Securities) market is characterized by low speculation due to the stability and low risk associated with government bonds, making them a safe investment. 2. Institutional investors, such as banks, insurance companies, and pension funds, dominate the G-sec market, accounting for a important portion of trading volume. In India, for instance, institutions hold over 80% of G-secs, reflecting their preference for stable returns.

Notes:
ITDC is an hospitality, retail and Education company owned by Government of India, under Ministry of Tourism. Its headquarters is located in New Delhi.

Notes:
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. SEPA stands for Single Euro Payment Are. The aim of SEPA is to ensure that payments within Europe take place as simply and effectively as those within a single country. IBAN stands for the International Bank Account Number is a unique identifier helping banks process payments from person to person automatically. The IBAN contains all necessary information of the owner if a bank account such as the account number, bank and branch information and country code. BBAN is short for Basic Bank Account Number. It represents a country-specific bank account number.

Notes:
Impetus to direct tax reforms in India, came with the recommendations of the Task Force on Direct & Indirect Taxes under the chairmanship of Vijay Kelkar in 2002. The main recommendations of this task force related to the direct taxes related to increasing the income tax exemption limit, rationalization of exemptions, abolition of long term capital gains tax, abolition of wealth tax etc.

Notes:
Insurance Regulatory and Development Authority (IRDA) is a statutory body set up for protecting the interests of the policyholders and regulating, promoting and ensuring orderly growth of the insurance industry in India.

Notes:
India is well-endowed with both exhaustible and renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources.  Coal or thermal energy is by far the largest source of energy.