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 an essential feature of a commercial bank?
[A] providing Locker facilities
[B] dealing with credit
[C] providing business information and data
[D] Sale of securities
Show Answer
Correct Answer: B [dealing with credit]
Notes:
Section 5 of Banking Regulation Act 1949 defines Banking as the act of accepting deposits for the purpose of lending. Commercial banks deal with money, accepts deposits and advance short-term loans / credits.
2. In context with the currency management in India the responsibility for coinage vests with which of the following?
[A] Government of India
[B] Reserve Bank of India
[C] Currency Chests
[D] Commercial Banks
Show Answer
Correct Answer: A [Government of India]
Notes:
Government of India on the basis of the Coinage Act, 1906
3. Which of these is not a liability of a commercial bank?
[A] Time Deposits
[B] Borrowing from saving banks
[C] Security Holdings
[D] Demand deposits
Show Answer
Correct Answer: C [Security Holdings]
Notes:
Security holdings are classified as assets on a commercial bank’s balance sheet according to Reserve Bank of India regulations. Security holdings include investments in government securities, shares, bonds, debentures, or other instruments. Liabilities include deposits like demand and time deposits and borrowings from other banks. The Banking Regulation Act, 1949, specifies asset and liability classifications for scheduled commercial banks in India.
4. What is India’s rank in steel production in the world?
[A] 1st
[B] 2nd
[C] 3rd
[D] 4th
Show Answer
Correct Answer: B [2nd]
Notes:
In 2024, India was the second-largest steel producer after China. India produced around 149.4 to 149.6 million tonnes of crude steel. China produced 1,005.1 million tonnes, and Japan ranked third with 84 million tonnes. Major Indian companies include Tata Steel, JSW Steel Limited, and SAIL. India plans to expand steel production capacity to 300 million tonnes by 2030 and 500 million tonnes by 2047.
5. Which is the biggest borrower in India?
[A] Indian Government
[B] Reserve Bank of India
[C] Indian Railways
[D] State Governments
Show Answer
Correct Answer: A [Indian Government]
Notes:
The Indian central government projected total debt is ₹214.82 lakh crore by March 2027. In FY 2026-27, the government plans to borrow ₹17.2 lakh crore through gross market borrowings. Net market borrowings are projected at ₹11.7 lakh crore. Reserve Bank of India mainly conducts monetary operations and does not borrow such amounts. State governments’ borrowings are lower than the Centre.
6. Consider the following:
- Minor Irrigation Scheme: CCA less than 2000 Hectares
- Medium Irrigation Scheme : CCA more than 2000 Hectares but less than 10000 Hectares
- Major Irrigation Scheme : CCA more than 10000 Hectares
Which among the above statements is / are correct?
[A] Only 1 and 2 are correct
[B] Only 2 and 3 are correct
[C] all are correct
[D] all are incorrect
Show Answer
Correct Answer: C [all are correct]
Notes:
Various irrigation schemes in India were classified by the erstwhile planning commission into three parts viz. Minor, Medium and Major Irrigation schemes.
- Major irrigation Scheme: Major irrigation schemes are those schemes which have a Culturable Command Areas of More than 10,000 hectares.
- Medium irrigation Schemes: The Medium Irrigation Schemes have a CCA of 2,000-10,000 hectares.
- Minor Schemes: Those with Culturable command areas up to 2000 hectares.
Cultural command area is the basis for the design of water course and basis for the design of an irrigation project. It is the proportion of the Gross Command Area which is Culturable and cultivable.
7. What percent of India’s external debt did ECBs comprise by March 2025?
[A] Decreased due to multilateral borrowing
[B] Nearly 40%, the largest component
[C] Remained constant at 27%
[D] Replaced by NRI deposits
Show Answer
Correct Answer: B [Nearly 40%, the largest component]
Notes:
By end-March 2025, external commercial borrowings formed 39.6% of India’s total external debt. Outstanding ECBs reached $291.6 billion, a 16.4% increase from the previous year. ECBs surpassed other categories, becoming the single largest component of India’s external debt until 2025. ECBs are medium or long-term loans raised from abroad by Indian companies.
8. What generally happens if the Bank Rate increases?
[A] An increase in market rates of interest
[B] A fall in market rates of interest
[C] A rise only in deposit rates
[D] A rise only in lending rates
Show Answer
Correct Answer: A [An increase in market rates of interest]
Notes:
The Reserve Bank of India sets the Bank Rate to influence lending rates. When the Bank Rate increases, borrowing from the RBI becomes costlier for commercial banks. This leads to higher lending and deposit rates in the economy. The last significant change in India’s Bank Rate was in May 2022, set at 4.65%. The Bank Rate mechanism is used as a monetary policy tool.
9. Which of the following is / are auctioned in Open Market Operations?
[A] Shares
[B] Debentures
[C] Securities
[D] Bullion
Show Answer
Correct Answer: C [ Securities ]
Notes:
Open Market Operations refer to the purchase and sale of the Government securities (G-Secs) by RBI from / to market.
10. Tank irrigation is mainly practiced in which region of India?
[A] South India
[B] West India
[C] North India
[D] North-East India
Show Answer
Correct Answer: A [South India]
Notes:
Tank irrigation is concentrated in South India, especially in Tamil Nadu, Andhra Pradesh, and Karnataka. South India receives irregular rainfall, making tank irrigation essential for water storage. Tank irrigation systems have existed in South India since ancient times, supported by regional rulers and local communities. The percentage of tank-irrigated area is highest in South Indian states compared to other regions of India.
