Indian Economy MCQs

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The International Monetary Fund was created in 1944 at the Bretton Woods Conference. Its main function is to provide temporary financial assistance to member countries facing balance of payments deficits. The IMF uses facilities like Stand-By Arrangements and Extended Fund Facility. Membership includes 190 countries as of 2023. The IMF also conducts economic surveillance and policy advice, but direct financial support for balance of payments stability is its core function.

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The correct answer is State Bank of India (SBI). It was established in 1955, evolving from the Imperial Bank of India, which itself was formed in 1921. The Imperial Bank was a successor to the Bank of Calcutta, founded in 1806, making SBI one of the oldest banks in India. SBI is now the largest bank in India, serving millions of customers worldwide.

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The RBI increases the Cash Reserve Ratio (CRR) to absorb surplus liquidity from banks. In August 2023, RBI required banks to maintain a 10% incremental CRR on certain deposit increases. Higher CRR compels banks to hold more deposits as reserves with RBI, reducing their capacity to lend and thus controlling excess liquidity in the financial system.

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The Tendulkar Committee was formed in 2005 and submitted its report in 2009. It shifted poverty measurement from a calorie-based model to a broader Poverty Line Basket approach. This included private expenditure on health and education alongside food and other needs. The committee recommended separate monetary values for rural and urban areas, utilized the Mixed Reference Period data, and made adjustments for price changes based on consumption patterns.

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Primary deficit is the gross deficit which is obtained by subtracting interest payments from budget deficit of any country of a particular year. We need to know the value of primary deficit, while calculating the fiscal deficit. Alternative Definition of Primary Deficit Primary deficit corresponds to the net borrowing, which is required to meet the expenditure excluding the interest payment. Primary Deficit = (Fiscal Deficit – Interest Payment)

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India’s services sector depends heavily on digital delivery, online platforms and fast data movement. Expanding digital infrastructure and high-speed connectivity improves access, reduces transaction costs and supports growth in IT-enabled services, financial services and other digitally delivered activities. This makes it a key enabling measure for sustaining service sector expansion. The other options would either restrict integration or narrow the demand base, which would not support broad-based growth.

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Indirect taxes such as GST and excise duties are levied at uniform rates regardless of the income level of the consumer. This results in all consumers, irrespective of their earning capacity, paying the same rate on goods and services. Indirect taxes are considered regressive for this reason. The tax rate is not linked to income or earning ability.

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The Indira Gandhi Canal is the longest irrigation canal of India. It starts from the Harike Barrage at Harike, a few kilometers below the confluence of the Satluj and Beas rivers in the Indian state of Punjab and terminates in irrigation facilities in the Thar Desert in the north west of Rajasthan state.

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Under the RBI’s Framework for Revival and Rehabilitation of MSMEs, banks are expected to identify stress in the account before it turns non-performing. The framework requires lenders to monitor such accounts through Special Mention Account (SMA) categories, which helps detect early warning signals and enables timely corrective action. This approach is meant to support revival, rehabilitation, and structured resolution of viable MSME units at an early stage.

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As per RBI, any non-banking financial company can be registered as an Infrastructure Finance Company, subject to minimum, 75% of the total assets of the company, should be deployed in the infrastructure loans.