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. The concept of weaker sections under ‘priority sector’ was introduced on the recommendation of which of the following committees?
[A] Krishnaswami Committee
[B] Varshney Committee
[C] Gadgil Committee
[D] Abid Hussain Committee
Show Answer
Correct Answer: A [Krishnaswami Committee]
Notes:
The term Priority Sector Lending was defined in the year 1972 by Krishnaswamy Committee. Initially banks were given an Priority sector lending target of 33.33%. But following the Krishnaswami Committee’s recommendations, the targets were raised to 40%.
2. Round-tripping is associated with which of the following?
[A] Capital Markets
[B] Foreign Direct Investments
[C] Cash Deposits
[D] Foreign Remittances
Show Answer
Correct Answer: B [Foreign Direct Investments]
Notes:
Round-tripping involves domestic funds sent abroad and returning as foreign direct investment (FDI), often through offshore financial centers like Mauritius and Cyprus. India has observed FDI inflows suspected to involve round-tripping, especially in the 2000s and 2010s. The Department for Promotion of Industry and Internal Trade monitors FDI trends. Round-tripping bypasses tax regulations on FDI in multiple countries, including India.
3. The government has responsibility to ensure availability of which among the following to all consumers regardless of their ability to pay price?
[A] Giffen Goods
[B] Supplementary Goods
[C] Merit Goods
[D] Complementary Goods
Show Answer
Correct Answer: C [Merit Goods]
Notes:
The correct answer is Merit Goods. Merit goods are products or services that the government believes are beneficial for individuals and society, and thus should be available to all, regardless of their ability to pay. Examples include education and healthcare. Governments often subsidize these goods to ensure equitable access, as they can lead to positive externalities, such as a more educated workforce and improved public health.
4. Which of the following Five year Plans set the lowest growth target?
[A] 1st
[B] 2nd
[C] 3rd
[D] 4th
Show Answer
Correct Answer: A [1st]
Notes:
The target annual GDP growth rate in the first five year plan was 2.1%, while the achieved growth rate was 3.6%.
5. Which of the following was target in Integrated Action Plan (IAP)?
[A] Drought
[B] Terrorism
[C] Left Wing Extremism
[D] Widespread Poverty
Show Answer
Correct Answer: C [Left Wing Extremism]
Notes:
The Integrated Action Plan (IAP) is aimed at bridging the development deficit in the extremely backward areas that are affected by Left Wing Extremism.
6. Round-tripping refers to which of the following practices?
[A] Policy to boost FDI
[B] Means of tax evasion
[C] Policy of export promotion
[D] Calculation of National Income
Show Answer
Correct Answer: B [Means of tax evasion]
Notes:
Round-tripping refers to moving funds out of a country and bringing them back through offshore routes, often to disguise the real source of money or to gain unfair tax or regulatory benefits. It is commonly associated with tax evasion, money laundering, or regulatory avoidance. In economics and finance MCQs, the term is used to describe this circular flow of capital, not a policy tool or a method of national income calculation.
7. Which of the following bodies procures, distributes, exports and imports agricultural commodities?
[A] FCI
[B] NAFED
[C] NABARD
[D] All of them
Show Answer
Correct Answer: B [ NAFED ]
Notes:
NAFED is the apex body in cooperative sector and deals in procurement , distribution, export and import of selected agricultural commodities.
8. The basic WTO principle with reference to trade barriers is that:
[A] Trade barriers can be imposed by any country that believes it will benefit from such trade barriers
[B] Trade barriers should be lowered equally and without discrimination for all member countries
[C] Trade barriers can be imposed if a majority of the members of the WTO agree
[D] Trade barriers should be the same in all member countries so that the result is equivalent to free trade
Show Answer
Correct Answer: B [Trade barriers should be lowered equally and without discrimination for all member countries]
Notes:
The WTO promotes non-discriminatory trade rules and seeks gradual reduction of trade barriers among its members. Under the Most-Favored-Nation principle, any advantage given to one member should be extended to all members unless a specific exemption applies. This helps prevent selective treatment in international trade and supports fair competition among countries. Hence, the correct statement is that trade barriers should be lowered equally and without discrimination for all member countries.
9. Self Help Groups (SHGs) in India are mainly associated with which of the following?
[A] Traditional commercial banking loans
[B] World Bank’s microfinance standards
[C] India’s microfinance model for poverty reduction
[D] Direct government cash transfer schemes
Show Answer
Correct Answer: C [India’s microfinance model for poverty reduction]
Notes:
Self Help Groups in India are closely linked with the microfinance approach used for poverty reduction and financial inclusion. The SHG-Bank Linkage Programme, promoted by NABARD, began as a pilot in 1992-93 and later grew into a major channel for savings, credit and livelihood support for rural poor households. SHGs are especially known for group-based thrift, internal lending and access to bank credit, making them a key instrument of India’s microfinance system.
10. Which of the following statements is not correct for economically underdeveloped countries? (UPSC Prelims 1987)
[A] Involvement of a very little proportion of labour in primary occupations
[B] Lower percentage of literacy
[C] Mass unemployment
[D] High birth rate
Show Answer
Correct Answer: A [Involvement of a very little proportion of labour in primary occupations]
Notes:
Primary jobs involve getting raw materials from the natural environment e.g. Mining, farming and fishing. There are a lot of people who are engaged in primary occupations in an economically underdeveloped country.
