Indian Economy MCQs

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Income tax was introduced in India in 1860 by Sir James Wilson. Income tax rates in India increase with higher income slabs as per the Finance Act. The income tax structure is defined in the Income Tax Act, 1961. Income tax collection is administered by the Central Board of Direct Taxes. A progressive tax system is implemented where tax liability rises as an individual’s income increases, with no fixed single rate for all.

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The Khadi and Village Industries Commission was established in April 1957 during the Second Five Year Plan. It assumed the functions of the former All India Khadi and Village Industries Board. The commission operates as a statutory body under the Ministry of Micro, Small and Medium Enterprises, Government of India. Its objectives include promoting and developing khadi and village industries in rural areas.

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Speculation involves taking positions to profit from expected price changes, accepting risk for potential gain. Hedging uses opposite positions to reduce price risk, while speculation increases risk exposure for possible reward. Both activities occur in securities, currency, and futures markets. Speculators provide market liquidity by accepting risk. Regulators monitor speculative activities to maintain market stability.

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The correct answer is SEBI (Securities and Exchange Board of India). SEBI was established in 1988 and became a statutory body in 1992. It regulates the securities market in India, protecting investor interests and promoting the development of the market. The RBI (Reserve Bank of India) primarily oversees monetary policy and banking regulation, while BSE (Bombay Stock Exchange) is a stock exchange, not a regulatory body.

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Circular trading involves participants repeatedly buying and selling the same securities within a group. This creates fake market activity without changing ownership. Circular trading is banned under SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. SEBI monitors for such patterns using price bands and volume filters. The practice is classified as market manipulation under Indian securities law.

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Substitute goods are those goods which can be used in place of each other. Examples of substitute goods are : tea and coffee; ghee and edible oil. In case of substitute goods like tea and coffee, demand for a commodity falls with a fall in the price of other substitute goods.

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The Global Enabling Trade Report is published by the World Economic Forum. The first edition appeared in 2008. The report assesses the policies, institutions, and services facilitating trade globally. The World Economic Forum is headquartered in Geneva, Switzerland, and was established in 1971. The report includes the Enabling Trade Index, which ranks countries based on their trade enabling factors.

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Shares outstanding equals total issued shares minus treasury shares. Treasury shares are shares repurchased by the company and held in its treasury. Shares outstanding are used in calculating market capitalization and earnings per share. Only shares held by external shareholders are considered outstanding. This figure changes when the company buys back or issues new shares.

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The Global Innovation Index is published by WIPO, while the Global Competitiveness Index is associated with the World Economic Forum. The World Bank Group discontinued the Doing Business report on 16 September 2021, and it is no longer a current World Bank publication. Therefore, none of the listed reports is presently published by the World Bank. This makes option 4 the correct answer.

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Banaras Locomotive Works (BLW), formerly known as Diesel Locomotive Works, is located in Varanasi, Uttar Pradesh. BLW was established in 1956. It is the largest locomotive manufacturing facility in India. The unit was renamed BLW in October 2020. BLW manufactures electric locomotives including WAP-7 and WAG-9 models. The factory exports locomotives to countries like Sri Lanka, Myanmar, and Mozambique.