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. Which body recommends Minimum Support Prices to the Government of India?
[A] Ministry of Agriculture and Farmers Welfare
[B] Cabinet Committee on Economic Affairs
[C] State Governments
[D] Commission for Agricultural Costs and Prices (CACP)
Show Answer
Correct Answer: D [Commission for Agricultural Costs and Prices (CACP)]
Notes:
The Commission for Agricultural Costs and Prices (CACP) was established in January 1965 as the Agricultural Prices Commission and renamed CACP in 1985. CACP functions as an attached office under the Ministry of Agriculture and Farmers Welfare. CACP annually recommends MSPs for 22-23 crops to the government. Its recommendations consider factors such as production costs, market prices, and inter-crop price parity.
2. Which is NOT an anti-inflationary measure by the central bank?
[A] Raising the Bank Rates
[B] Raising Reserve Ratio Requirements
[C] Rationing of Credit
[D] Purchase of securities in Open Markets
Show Answer
Correct Answer: D [Purchase of securities in Open Markets]
Notes:
The Reserve Bank of India purchases government securities in open market operations to increase liquidity in the banking system. Increased liquidity leads to higher money supply in the economy. Higher money supply may lower interest rates and promote borrowing. This process is utilized to support economic growth and is considered an expansionary monetary policy. Open market purchase of securities is not used to control inflation.
3. What is the objective of the Central Government in creating the “Non-lapsable Central Pool of Resources”?
[A] To provide development funding in Naxalite affected areas
[B] To provide additional development grant to most backward 200 districts all over country
[C] To provide time to time fiscal stimulation to the economy
[D] To provide development funding to North East and Sikkim
Show Answer
Correct Answer: D [ To provide development funding to North East and Sikkim ]
Notes:
NLCPR The broad objective of the Non-Lapsable Central Pool of Resources (NLCPR) is to ensure speedy development of infrastructure in the North Eastern Region and Sikkim by increasing the flow of budgetary financing for specific viable infrastructure projects/schemes in the region. The provision is for funding these projects. The outlay includes a provision of Rs. 50 crore for funding special projects/schemes for the economic development of the Karbi Anglong Autonomous Territorial Council (KAATC) area in Assam.
4. Consider the following statements regarding the “PRASAD” scheme:
- It focuses on the development and rejuvenation of identified pilgrimage destinations and heritage cities.
- Under the scheme, the Ministry of Tourism provides Central Financial Assistance (CFA) to State Governments/Union Territory Administrations for tourism projects.
- As per the most recent data, 54 projects have been sanctioned under the scheme across 28 States/UTs.
Which of the above statements is/are correct?
[A] Only 1 and 2
[B] Only 2 and 3
[C] Only 1 and 3
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
The PRASAD scheme, launched by the Ministry of Tourism in 2014-15, stands for Pilgrimage Rejuvenation and Spiritual Augmentation Drive. Statement 1 is correct: it targets pilgrimage and heritage city development. Statement 2 is correct: the ministry provides Central Financial Assistance. Statement 3 is correct: 54 projects in 28 States/UTs have been sanctioned under the scheme as per latest data.
5. Which is the largest component of India’s foreign exchange reserves?
[A] Gold
[B] Foreign Currency Assets
[C] SDR
[D] Reserve Tranche with IMF
Show Answer
Correct Answer: B [Foreign Currency Assets]
Notes:
As of November 14, 2025, Foreign Currency Assets amounted to USD 562.29 billion. India’s total foreign exchange reserves reached USD 717.06 billion on February 6, 2026. Foreign Currency Assets typically comprise 78-82% of the country’s forex reserves. Other components such as gold, SDRs, and Reserve Tranche with IMF form a much smaller proportion of the total reserves.
6. Which state in India has the largest coal reserves?
[A] Chhattisgarh
[B] West Bengal
[C] Jharkhand
[D] Odisha
Show Answer
Correct Answer: D [Odisha]
Notes:
Odisha has the largest coal reserves in India with 94.52 billion tonnes as of April 1, 2025. This constitutes about 28.8% of India’s total coal reserves. Major coalfields in Odisha include Talcher, Ib Valley, and Rampia. The state is a leading coal producer and exporter, and vast coal resources are managed under the Mahanadi Coalfields Limited, a subsidiary of Coal India Limited.
7. Which among the following is a direct tax?
[A] Corporate tax
[B] Wealth tax
[C] Income tax
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Direct tax is a government levy on the income, property, or wealth of people or companies. A direct tax is borne entirely by the entity that pays it, and cannot be passed on to another entity. Examples include corporation tax, income tax, and social security contributions.
8. What does financial inclusion primarily refer to in India?
[A] Affordable financial services
[B] Affordable ration
[C] Affordable housing
[D] Affordable education
Show Answer
Correct Answer: A [Affordable financial services]
Notes:
Financial inclusion in India refers to providing affordable financial services such as payments, savings, credit, and insurance. The Reserve Bank of India has promoted financial inclusion through initiatives like Jan Dhan Yojana, launched in 2014, to increase banking penetration and usage. Financial inclusion is essential in India’s economic and social policy frameworks as per RBI guidelines and government mandates.
9. Who typically benefits from a general rise in prices? (UPSC Prelims 1984)
[A] Debtors with fixed-rate debt
[B] Pensioners on fixed incomes
[C] Savers holding cash
[D] Creditors holding nominal debt
Show Answer
Correct Answer: A [Debtors with fixed-rate debt]
Notes:
When prices rise due to inflation, the real value of money declines. Debtors with fixed-rate debt pay back their loans in money that is worth less than when they borrowed it. This reduces the real burden of their debt. Fixed-rate debt terms remain unchanged despite money’s decreased purchasing power, benefitting debtors during periods of inflation. Creditors and savers lose real value in such scenarios.
10. Which industry has expanded most in India’s cooperative sector recently? (UPSC Prelims 1991)
[A] Cotton textile
[B] Jute
[C] Sugar
[D] Cement
Show Answer
Correct Answer: C [Sugar]
Notes:
As of 2024, the sugar industry is the largest in India’s cooperative sector. Nearly 50% of sugar mills in India operate under cooperative societies, especially in Maharashtra. Production increased significantly in recent years due to government support, favorable policies, and ethanol blending programs. Maharashtra and Uttar Pradesh contribute the majority of cooperative sugar factories. Cooperative expansion continued through 2023-24.
