Indian Economy GK Quiz-1

Indian Economy GK Quiz-1

Indian Economy Multiple Choice Questions (MCQs) Quiz for State and UPSC Civil Services Examinations. Objective Questions on Indian Economy for competitive examinations.

    1. Which among the following policy of Life Insurance Company is related to regular old-age pension?

    (1) Jivan Kishore
    (2) Jivan Chhaya
    (3) Jivan Sanchay
    (4) None of these
    1. (4) LIC (Life Insurance Corporation, India) introduces its pension plan to offer individuals with regular income during their old age. Pension also well-known as retirement plans are predominantly intended for the citizens who are disposed to make their old age financially secure. Jeevan Kishore is a children’s plan under which the child becomes the owner of the policy automatically at the age of 18 years. Jeevan Chhaya is beneficial for partner having less than a year old child (not an adopted child). It makes provision for higher education / marriage of the child. Jeevan Sanchay is a without profit money-back plan available for the age group between 14 years and 58 years. LIC’s Jeevan Akshay- VI is a pension plan for people who are at present in their retirement age and have no pension. Under this policy, LIC will pay the policy holders a reliable payment at normal time periods starting right after the holder pays a lump sum premium towards the cost of the policy. The annuitant can accept the payment as per his aspiration either monthly, quarterly, half-yearly or yearly.

    2. The decimal system of Indian currency was started in

    (1) 1950 
    (2) 1955
    (3) 1957 
    (4) 1960
    2. (3) India became independent on 15 August 1947 and was left with a legacy of non-decimal coinage.
    One rupee was divided into 16 annas or 64 pice, with each anna therefore equal to 4 pice. In 1957, India shifted to the decimal system, but for a short period both decimal and non-decimal coins were in circulation. To distinguish between the two pice, the coins minted between 1957 and 1964 have the
    legend “Naya Paisa” (“new” paisa). The denominations in circulation were 1, 2, 5, 10, 20, 25, 50 (naya
    paise and one rupee which remained as the same pre-decimal value. Therefore pre-decimal coins of one, half and quarter rupees could remain in circulation after decimalisation. The rupee remained unchanged in value and nomenclature. It, however, was now divided into 100 ‘paisa’ instead of 16 annas or 64 pice. For public recognition, the new decimal paisa was termed ‘Naya Paisa’ till 1 June 1964 when the term ‘Naya’ was dropped.

    3. Antyodaya Programme is associated with :

    (1) liberation of bonded labour
    (2) bringing up cultural revolution in India
    (3) demands of textile labourers
    (4) upliftment of the poorest of the poor
    3. (4) Antyodaya Anna Yojana (AAY) is a centrally sponsored scheme which was launched on December 25, 2000 for one crore of the poorest families. It is an important milestone in providing foodgrains to the poor. It contemplated providing 25 kg. of foodgrains per month at highly subsidized rates of Rs. 2 per kg. for wheat and Rs. 3 per kg. for rice to each Antyodaya family. This scheme reflects the commitment of the Government of India to ensure food security for all, create a hunger free India in the next five years and to reform and improve the Public Distribution System so as to serve the poorest of the poor in rural and urban areas.

    4. Which of the following is not a necessary condition for the development of India ?

    (1) Capital Accumulation
    (2) Resource discovery
    (3) Population growth
    (4) Technological develop-ment
    4. (3) Rising population can be a virtue or can be vice with regards to economic development of a country. In India, demerits of population growth outweigh its merits. Due to large population size and its rate of growth, our per capita income continues to be stagnant at a low level. Since First Five Year Plan, our national income has increased about 11 times but our per capita income has increased only about three and half times, thanks to the rise in population. Also, large population size has tended to reduce the land man ratio in India which reduces productivity of land and labour. Growing population has also reduced per capita availability of cereals and pulses. Further, due to high growth rate of population, unemployment is assuming monstrous proportions. Lack of employment opportunities outside agriculture, builds pressure on farming as a source of subsistence. Consequently, disguised unemployment in the farming sector is emerging as a serious challenge.

    5. The Indian economy can be most appropriately described as a :

    (1) Capitalist economy
    (2) Socialist economy
    (3) Traditional economy
    (4) Mixed economy
    5. (4) There are primarily two types of economiescapitalist or free market economy and socialist
    economy. Mixed economy is a median between these two main economies taking some characteristics of either of them. We have adopted mixed economy in India. All the basic industries such as railways, post and telegraph, defence production, atomic energy etc. are in the public sector. Industries dealing with consumer goods are in the private sector. India has a pubic private partnership economy.

    6. The Tarapore Committee recommended that before capital account was made convertible the rate of inflation should be brought down for three years to within :

    (1) 3.5% 
    (2) 0.3%
    (3) 4.6% 
    (4) 5.7%
    6. (1) The Tarapore Committee on capital account convertibility had laid down a three year, three phase
    schedule for allowing convertibility. It laid down three pre-conditions: (a) fiscal consolidation implying that the centre’s fiscal deficit should come down to 3.5 per cent of GDP; (b) a mandated inflation target; and (c) strengthening of the financial system to (i) involve a near complete clampdown on activities of weak banks, (ii) major cut in the CRR, and (iii) complete deregulation of interest rates.

    7. What is NABARD’s primary role?

    (1) to provide term loans to state co-operative banks
    (2) to assist state governments for share capital contribution
    (3) to act as re-finance institution
    (4) All of the above
    7. (4) NABARD is the apex institution in the country which looks after the development of the cottage
    industry, small industry and village industry, and other rural industries. Its other functions are: to
    coordinate the rural financing activities of all institutions engaged in developmental work at the field level and maintain liaison with Government of India, State Governments, Reserve Bank of India (RBI)
    and other national level institutions concerned with policy formulation; to re-finance the financial
    institutions which finances the rural sector; to regulate the cooperative banks and the RRB’s, etc.
    NABARD’s refinance is available to State Co-operative Agriculture and Rural Development Banks (SCARDBs), State Co-operative Banks (SCBs), Regional Rural Banks (RRBs), Commercial Banks (CBs) and other financial institutions approved by RBI.

    8. Under which Act/Policy was the BIFR established ?

    (1) Industrial Policy of 1980
    (2) Companies Act
    (3) Sick Industiral Companies Act
    (4) MRTP Act
    8. (3) The Board for Industrial and Financial Reconstruction (BIFR) is an agency of the government
    of India, part of the Department of Financial Services of the Ministry of Finance to determine sickness of industrial companies and to assist in reviving those that may be viable and shutting down the others. It was established under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The board was set up in January 1987 and became functional as of 15 May 1987.

    9. What is the maximum amount of investment in the shares of debentures of notified companies like the ICICI, the IDBI etc. that will entitle a rebate in income tax up to 20% of the amount invested?

    (1) Rs. 80000 
    (2) Rs. 60000
    (3) Rs. 20000 
    (4) Rs. 10000
    9. (1) A salaried employee can claim tax rebate under section 88. Amount of tax rebate is 20% of gross
    qualifying amount (Rs.80000) or Rs. 16000, whichever is lower. If a person invests only in other
    securities, excluding shares, debentures and units of infrastructure sector; then the maximum rebate is
    only Rs. 12000 (20% of Rs. 60000). This rebate may be extended upto Rs. 16000 on further investment
    up to Rs. 20000 in shares and debentures. By investing in shares, debentures and infrastructure units a maximum rebate of Rs. 16000 (i.e., 20% of Rs. 80000) may be claimed.

    10. Which authority recommends the principles governing the grantsin-aid of the revenues of the states out of the Consolidated Fund of India?

    (1) Public Accounts Committee
    (2) Union Ministry of Finance
    (3) Finance Commission
    (4) Inter-State Council
    10. (3) Finance Commission of India is established under Article 280 of the Indian Constitution by the President of India to define the financial relations between the centre and the state. It is entrusted with the task of distribution of net proceeds of taxes between Centre and the States, to be divided as per their respective contributions to the taxes; determine factors governing Grants-in Aid to the states and the
    magnitude of the same; and work with the State Finance Commissions and suggest measures to
    augment the Consolidated Fund of the States so as to provide additional resources to Panchayats and
    Municipalities in the state.

    11. RBI does not transact the business of which of the following state governments ?

    (1) Nagaland 
    (2) Assam
    (3) J & K 
    (4) Rajasthan
    11. (3) An important function of the Reserve Bank of India is to act as Government banker, agent and adviser. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the Reserve Bank of India Act, 1934.

    12. Which amidst the following banks was recently converted to a “Universal Bank” ?

    (1) Corporation Bank
    (2) Bank of Baroda
    (3) IDBI Bank
    (4) Canara Bank
    12. (3) The Industrial Development Bank of India (IDBI) was established in 1964 by the government of India under an act of the Indian Parliament called the IDBI Act. On December 15, 2003, the Indian Parliament approved the conversion of Industrial Development Bank of India’s (IDBI) into a universal bank. The government’s move was significant given the fact that the Development Financial Institution (DFI) had been struggling to sustain its growth in recent times. In India, the Development Financial Institutions were established and developed by Government of India and Reserve Bank of India (RBI) to meet the specific needs of the industry and were traditionally engaged in long term financing, as their main objective was to take care of the investment needs of industries and to contribute to a better industrial climate.

    13. Which of the following PSUs has been privatised?

    (1) HZL 
    (2) CMC
    (3) Hotel Corporation of India
    (4) NALCO
    13. (1) Hindustan Zinc Limited (HZL) is an integrated mining and resources producer of zinc, lead, silver and cadmium. It is a subsidiary of Vedanta Resources PLC. HZL is the world’s second largest zinc producer. Hindustan Zinc Limited was incorporated from the erstwhile Metal Corporation of India on 10 January 1966 as a Public Sector Undertaking. In 2001 as part of the BJP Government’s anti-corruption drive, the company was put up for sale. In April 2002, Sterlite Opportunities and Ventures Limited (SOVL) made an open offer for acquisition of shares of the company; consequent to the disinvestment of Government of India’s (GOI) stake of 26% including management control to SOVL and acquired additional 20% of shares from public, pursuant to the SEBI Regulations 1997. In August 2003, SOVL acquired additional shares to the extent of 18.92% of the paid up capital from GOI in exercise of “call option” clause in the share holder’s agreement between GOI and SOVL.

    14. Which amidst the following banks was converted to a ‘Universal Bank’ recently?

    (1) Punjab National Bank
    (2) ICICI Bank
    (3) UTI Bank
    (4) Indus-Ind Bank
    14. (2) A universal bank participates in many kinds of banking activities and is both a commercial bank and an investment bank. Universal banks may offer credit, loans, deposits, asset management, investment advisory, payment processing, securities transactions, underwriting and financial analysis.
    Fiscal 2002 marked a turning point in the history of the ICICI group, as it witnessed the culmination of
    the ICICI group’s strategy of becoming an integrated financial services provider – the merger of ICICI
    Limited (ICICI) with ICICI Bank. The merger was a path-breaking initiative, which created India’s first
    “universal bank” and the second-largest bank in the country. As part of the reorganization, two of ICICI’s wholly-owned retail finance subsidiaries viz. ICICI Personal Financial Services Limited (ICICI PFS) and ICICI Capital Services Limited (ICICI Capital), were also merged with ICICI Bank, in order to integrate and consolidate the retail business.

    15. Who has provided the Savings Bank facility to the largest number of account-holders in India?

    (1) State Bank of India
    (2) Punjab National Bank
    (3) Allahabad Bank
    (4) Post Office
    15. (4) The Department of Posts, trading as India Post, is a government-operated postal system in India.
    Owing to its far-flung reach and its presence in remote areas, the Indian postal service is involved in other services such as small savings banking and financial services. The post office has offered and continues to offer various savings schemes, including National Savings Certificates, the Public Provident Fund, Savings Bank Accounts, Monthly Income Schemes, Senior Citizen Saving Schemes, and Time Deposit Accounts. Small savings accounts in rural post offices were a keystone to the department’s policy and the department had the largest number of savings accounts across the country.

    16. The symbol of Reserve Bank of India is

    (1) Capitol of Asokan Pillar
    (2) Kuber with a purse of money
    (3) Tiger before a Palm tree
    (4) A dog sitting in a defensive state
    16. (3) The logo of the Reserve Bank of India comprises a tiger walking underneath a palm tree. It is contended that the Reserve Bank of India copied the tiger and palm tree symbol from the gold Mohur issued by the East India Company in the 19th century. The double Mohur of William IV had a nice reverse, which was a symbol of Lion and a Palm tree. When RBI was created, it was decided that the reverse of Double Mohur, the Lion and Palm design should be used as the emblem of RBI. The last minute modification was made introducing Tiger instead of Lion.

    17. For whom was the first departmental life insurance started ?

    (1) Army
    (2) Civil officers of Central Government
    (3) Employees of postal department
    (4) Life Insurance Corpor-ation
    17. (3) Postal Life Insurance was started on 01.02.1884 as a welfare measure for the employees of Posts & Telegraphs Department under Government of India dispatch No. 299 dated 18 October, 1882 to the
    Secretary of State. Due to popularity of its schemes, various departments of Central and State Governments were extended its benefits. Now Postal Life Insurance is open for employees of all central
    and state government departments, nationalised banks, public sector undertakings, financial institutions, local municipalities and District councils and educational institutions aided by the Government.

    18. What is the animal on the insignia of the RBI ?

    (1) Lion 
    (2) Tiger
    (3) Panther 
    (4) Elephant
    18. (2) The logo of the Reserve Bank of India comprises a tiger walking underneath a palm tree. When RBI was created, it was decided that the reverse of Double Mohur, the Lion and Palm design should be 
    used as the emblem of RBI. The last minute modification was made introducing Tiger instead of Lion.

    19. The main source of revenue for a State Government in India is

    (1) Sales tax 
    (2) Excise duty
    (3) Income tax 
    (4) Property tax
    19. (1) The principal source of States own tax revenues is sales tax which accounts for about 60 per cent of the total. The other major components of States own tax revenues according to their revenue share are State excise, registration and stamp duty, motor vehicle and passenger tax, electricity duty, land revenues, profession tax, entertainment taxes and other sundry taxes. In the wake of economic reforms, several States competitively announced various tax concessions, especially sales tax concessions, to attract private investments. These tax wars resulted in considerable reduction in the buoyancy of growth of tax revenues of the States without commensurate gains in terms of private investment.

    20. To achieve high rates of growth of national output, the economy has to

    (1) reduce the rate of growth of population
    (2) borrow foreign capital
    (3) step up the rate of savings
    (4) increase the rate of investment and reduce the capital output ratio
    20. (4) The immediate effect of devoting a larger share of national output to investment is that the economy devotes a smaller share to consumption; that is, “living standards” as measured by consumption fall. The higher investment rate means that the capital stock increases more quickly, so the growth rates of output and output per worker rise. According to Smith, in a developing economy, both income level and capital stock rise. In addition to this, the rate of capital accumulation also shows a tendency to increase. This leads to increase in the capital stock in successive periods as investment keeps on increasing. Another important factor which contributes to the progress of an economy is the successive decline in the incremental capital-output ratio due to the influence of capital on the productivity of labour.

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