Indian Economy MCQs

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Planning Commission was set up by a Government of India Resolution in 1950 as an advisory and specialized institution. It was charged with the responsibility to formulate a strategy of development for independent India in a long-term perspective and for making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities.

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Realized Investment means an Investment resulting in a sale, transfer or restructuring of a good or service. It is considered to be the main determinant of the level of activity in national income.

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Uttarakhand was the first state to set up Special Agricultural Zones (SAZs) in 2011. It was launched on the lines of the Special Economic Zones (SEZs). It encouraged the farmers to develop high-quality crop seeds typical to hilly regions.

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The financial year of India begins from April 1 of a calendar year and ends on March 31 of the next calendar year. This system has been into existence since the British Raj in India. Hence, Banks in India publish their financial statements / balance sheets for March 31st of every year.

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The Reserve Bank of India (RBI) is the primary regulator for Housing Finance Companies (HFCs) in India, having taken over these powers from the National Housing Bank (NHB) in 2019. While the NHB remains responsible for the supervision and development of the housing finance sector, regulatory authority, including licensing and setting prudential norms, rests with the RBI.   In 2019, the Finance Act 2019 amended the National Housing Bank Act, 1987, transferring regulatory control from the NHB to the RBI to ensure uniform regulation of all lending institutions.

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Progressive taxation is based on the principle of ability to pay, with higher earners paying higher tax rates. It aims to reduce income inequality and can incorporate administrative efficiency. Encouraging work and investment incentives is not a core principle, as progressive taxes may reduce such incentives at higher income levels.

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Economic Planning refers to any plans of economic activity which point to achieve specific social and economic outcomes. It is a subject matter of concurrent list in 7th schedule of Indian constitution.

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An increase in any of the reverse repo rate, cash reserve ratio, statutory liquidity ratio, or bank rate reduces liquidity or increases borrowing costs for banks, leading to higher market interest rates. All four are contractionary monetary tools used by central banks to moderate inflation and control credit growth by tightening monetary conditions.

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The Public Distribution System distributes subsidized foodgrains to eligible households under the National Food Security Act, 2013. The Food Corporation of India receives government funding for procurement and distribution of grains. Central Issue Prices are set by the government for affordable supply. As of January 2024, free foodgrains are provided to beneficiary households, impacting over 81 crore people.

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C is the correct answer. In case of the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investor’s trade securities among themselves. Thus, Primary market is for raising the Equity capital or share capital, which is the owners’ interest on the assets of the enterprise after deducting all its liabilities. This mechanism of buying and selling shares through stock exchange is known as the secondary markets.