Indian Economy MCQs

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The Monetary Policy Committee was formed in 2016 after an amendment to the RBI Act, 1934. The Committee consists of six members: three from the Reserve Bank of India and three nominated by the Central Government. The Governor of the Reserve Bank of India is designated as the ex-officio Chairperson of the Monetary Policy Committee.

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The taxing powers of the central government encompass taxes on income (except agricultural income), excise on goods produced (other than alcohol), customs duties, and inter-state sale of goods.
The state governments are vested with the power to tax agricultural income, land and buildings, sale of goods (other than inter-state), and excise on alcohol. Local authorities such as Panchayat and Municipality also have power to levy some minor taxes.

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India’s derivative market now includes credit index derivatives under the RBI’s credit derivatives framework, alongside other regulated futures products. Currency futures, interest rate futures and commodity futures are also permitted in their respective market segments under the applicable regulatory framework. Therefore, the correctly permitted instrument in this context is credit index derivatives. This question tests awareness of the current status of RBI-regulated derivatives in India.

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Road and railways are economic overheads as they provide essential infrastructure for transportation and movement of goods, stimulating economic activity. Hospitals, schools, and sanitation are social overheads, catering mainly to health, education, and hygiene rather than direct economic productivity.

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The target annual GDP growth rate in the first five year plan was 2.1%, while the achieved growth rate was 3.6%.

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Competitive devaluation refers to countries deliberately reducing their currency value to make exports cheaper. When multiple countries do this, the benefit to any one country’s exporters is reduced, harming their export competitiveness. In recent years, central banks have intervened to devalue currencies, impacting exporters most. Exporters lose price advantage if other nations devalue simultaneously. The phenomenon is termed a currency war.

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NAFED is the apex body in cooperative sector and deals in procurement , distribution, export and import of selected agricultural commodities.

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All three statements are correct. India was among the founding members of the AIIB and signed the MoU in October 2014. The bank’s headquarters are indeed located in Beijing’s Asia Financial Center in the Olympic Forest Park area. As of now, AIIB has 111 members (including prospective members) from different continents, confirming it has over 100 member states.

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Foreign Portfolio Investment allows FIIs, now classified as FPIs in India, to invest in securities like shares or bonds of Indian companies without obtaining management control. FIIs and FPIs are regulated by the Securities and Exchange Board of India. This is different from FDI, which involves direct investment in business operations or ownership. FIIs were reclassified under SEBI FPI Regulations 2014.

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Custom duty, also called customs duty, is levied on imports and exports to regulate international trade and protect domestic interests. Because it directly affects the flow and cost of goods across borders, it is primarily linked with foreign trade policy. It is also a source of government revenue, but its main policy role in this context is trade regulation rather than monetary or industrial control.