Indian Economy MCQs

Notes:
Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation

Notes:
The secondary market is for trading securities that have already been issued. Transactions involve investors buying and selling among themselves. The issuing company does not receive any funds from these trades. Major examples include stock exchanges like NYSE and NASDAQ. The market provides liquidity and facilitates price discovery for already existing securities including shares, bonds, and debentures.

Notes:
Non-Plan Expenditure covers routine government expenses such as interest payments, defense costs, and pensions. Central Assistance to States for developmental projects is categorized as Plan Expenditure, intended for developmental activities as per the Planning Commission guidelines before 2017. After 2017, India merged Plan and Non-Plan expenditure in Union Budget, but the classification in this question refers to the pre-2017 structure.

Notes:
As of August 2025, National Stock Exchange became the largest shareholder in NSDL after IDBI Bank reduced its stake by selling 11.11% in the IPO, retaining 14.99%. NSE holds a 24% stake. NSDL was established in 1996. Regulatory norms restrict non-institutional ownership in depositories to 15% in India. NSDL facilitates electronic securities settlement nationwide.

Notes:
The correct answer is “Only 1 is correct.” Explanation: 1. The Market Stabilization Scheme (MSS) allows the government to issue Treasury Bills and dated securities to manage liquidity, but it does not involve a separate borrowing program beyond the normal limits. 2. The money raised under the MSS is not kept in the MSS Account as part of the Consolidated Fund of India. instead, it is maintained in a separate account. 3. While the Comptroller and Auditor General of India (CAG) audits government accounts, the MSS Fund itself is not specifically audited by the CAG. Trivia Fact: The MSS was introduced in 2004 to help the Reserve Bank of India manage excess liquidity in the economy, particularly during periods of high capital inflows.

Notes:
Commercial Paper is issued as an unsecured promissory note. It was first introduced in India in 1990. CPs have maturities ranging from 7 days to 1 year. Only companies with a high credit rating can issue CPs. The Reserve Bank of India regulates CP issuance. CPs are used for short-term funding needs by corporate bodies, primary dealers, and financial institutions.

Notes:
When an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public, it is called Initial Public Offering or IPO. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Notes:
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)

Notes:
The first cotton mill in India was the Bombay Spinning Mill. It was established in Bombay in 1854 by Cowasji Nanabhai Davar. Bombay was a major commercial centre for the cotton trade in the 19th century. The mill contributed to the industrialization of the textile sector in western India and marked the start of the modern textile industry in India.

Notes:
All the three points mentioned above are true. These points differentiate NBFC and banks