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 among the following is the highest credit risk rating that can be awarded to any company by CRISIL?
[A] AAA
[B] AAA+
[C] AA+
[D] A++
Show Answer
Correct Answer: A [AAA]
Notes:
CRISIL was the first credit rating agency in India, formed in the year1988. In 2005, it became a subsidiary of American company S&P Global. The highest credit risk rating awarded to any company is ‘AAA’ and the lowest is ‘D’.
2. Which among the following bodies estimates the national income of India?
[A] Office of the Economic Advisor
[B] Ministry of Statistics
[C] Central Statistical Office
[D] Ministry of Finance
Show Answer
Correct Answer: C [Central Statistical Office]
Notes:
The Central Statistics Office (CSO) is a governmental agency in India under the Ministry of Statistics and Programme Implementation. It is responsible for estimating National Income, Index of Industrial Production and Consumer Price Indices.
3. How many currencies are included in the BIS REER basket?
[A] 6
[B] 26
[C] 36
[D] 64
Show Answer
Correct Answer: D [64]
Notes:
The Bank for International Settlements (BIS) calculates the broad real effective exchange rate (REER) index using a basket of 64 currencies. The BIS methodology weights these currencies according to trade shares to reflect the competitiveness of a country in the global market. BIS also publishes narrower REER indices, like a 27-currency basket, but the broadest index uses 64 currencies.
4. National Social Assistance programme was initially rolled out in which of the following five year plans?
[A] Fifth Five Year Plan
[B] Sixth Five Year Plan
[C] Seventh Five Year Plan
[D] Eighth Five Year Plan
Show Answer
Correct Answer: D [Eighth Five Year Plan]
Notes:
The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.
5. Consider the following statements:
- The Market Stabilization Scheme provides for issue of Treasury Bills and/or dated securities by the Government in addition to their normal market borrowing programme up to an annual aggregate ceiling.
- The money raised in Market Stabilization Fund is kept in the MSS Account as a part of Consolidated Fund of India
- The auditing of the MSS Fund is done by Comptroller and Auditor General of India
Which among the above statements is / are correct?
[A] Only 1 is correct
[B] Only 1 & 2 are correct
[C] 1, 2 & 3 are correct
[D] Only 1 & 3 are correct
Show Answer
Correct Answer: A [Only 1 is correct]
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.
6. What does “round tripping” in FDI refer to?
[A] The use of FDI to set up subsidiaries worldwide
[B] Domestic capital routed abroad and reinvested as foreign investment
[C] Repatriation of FDI profits to the investor’s home country
[D] Cross-border flows through free trade zones without taxes
Show Answer
Correct Answer: B [Domestic capital routed abroad and reinvested as foreign investment]
Notes:
Round tripping in FDI involves domestic capital sent to foreign jurisdictions and then returning as foreign investment. Such investments often use offshore financial centers or low-tax countries. This mechanism enables companies to claim incentives for foreign investors. It led to significant FDI inflows for countries such as India and China through countries like Mauritius and Hong Kong via special purpose vehicles.
7. What must foreign banks do if they miss priority sector lending targets in India?
[A] Deposit shortfall in RIDF
[B] Deposit shortfall with NABARD
[C] Deposit shortfall with RBI
[D] Deposit shortfall with SIDBI for one year
Show Answer
Correct Answer: D [Deposit shortfall with SIDBI for one year]
Notes:
Foreign banks in India failing to meet priority sector lending targets must deposit the shortfall with SIDBI for one year as per RBI guidelines. Domestic banks deposit shortfalls in the Rural Infrastructure Development Fund under NABARD. The RBI’s 2020 guidelines specify a 40 percent lending target for foreign banks with 20 or more branches in India, based on their Adjusted Net Bank Credit.
8. 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.
9. Which is India’s largest source of power generation as of 2025?
[A] Coal
[B] Solar
[C] Wind
[D] Hydropower
Show Answer
Correct Answer: A [Coal]
Notes:
Coal accounted for about 70% of India’s electricity generation in 2025. Coal-based power output was 1,247 TWh in 2025 after a 3.4% decline. Non-fossil sources contributed 25% collectively in FY 2024-25. India added 35 GW solar in 2025, but total renewable generation reached 270 TWh compared to coal’s 1,247 TWh.
10. Which is the most popular channel for foreign inward remittances to India?
[A] SWIFT
[B] Rupee Drawing Arrangement (RDA)
[C] Direct transfers
[D] Cheques and Drafts
Show Answer
Correct Answer: A [SWIFT]
Notes:
SWIFT facilitates secure international financial messaging for cross-border transactions. Bank transfers using SWIFT account for the highest share of inward remittance flows to India as per central bank reports post-2023. SWIFT is preferred due to extensive global reach, regulatory compliance, and ability to process high-value transactions efficiently. Remittance patterns have shifted toward advanced economies, increasing reliance on SWIFT network transactions.
