Indian Economy MCQs

Notes:
Democratic planning is the planning process generally adopted in mixed economy. Mixed economy possesses characteristics of both capitalist economy as well as socialist economy. Democratic planning involves participation of all the citizens of an economy directly or indirectly.

Notes:
In the year 1924, the practice of presenting the railway budget separately from the general budget (or vice versa in true sense) started in India.

Notes:
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.

Notes:
Countervailing duty is a trade remedy levied on imported goods when those goods receive subsidies in the exporting country. The purpose is to neutralize the unfair price advantage created by the subsidy and protect domestic producers from injury. Such duties are generally used after an investigation confirms the presence of subsidization and its impact on competing domestic industry. Therefore, the duty is imposed on subsidized imports, not on exports.

Notes:
In India’s money supply classification, M1 represents narrow money because it includes currency with the public, demand deposits and other highly liquid balances. M3 is known as broad money since it covers M1 plus time deposits held with banks and therefore reflects a wider measure of money in the economy. Hence, both statements are correct. This classification is widely used in banking and monetary policy analysis.

Notes:
The International Development Association (IDA) was established in 1960 as part of the World Bank Group. IDA offers highly concessional loans and grants to the world’s poorest countries. As of fiscal year 2025, IDA has provided $600 billion to 116 countries. Its concessional loans typically have repayment periods of up to 40 years with long grace periods and low or zero interest.

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.

Notes:
Central Employment Guarantee Council was constituted under Section 10 of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 to discharge the duties and functions under this act.

Notes:
Foreign Portfolio Investment refers to investments in securities like stocks and bonds by foreign investors. FPI is highly liquid and can be withdrawn quickly. FPI inflows and outflows are sensitive to global and domestic financial conditions. Sudden withdrawal of FPI causes market volatility. FPI is termed “hot money” compared to FDI, which involves long-term capital commitments. FPI contributed to major capital outflows during financial crises.

Notes:
The greenshoe option is an IPO underwriting clause first used by Green Shoe Manufacturing Company. It allows underwriters to sell up to 15% extra shares above the original IPO amount to support share price stability and meet demand. The Securities and Exchange Commission permits this clause. The option helps underwriters stabilize prices by covering over-allotted shares in the aftermarket.