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 the highest credit risk rating that can be awarded to any company by CRISIL?
[A] AAA
[B] AAA+
[C] AA+
[D] A++
Show Answer
Correct Answer: A [AAA]
Notes:
CRISIL was the first credit rating agency in India, formed in the year1988. In 2005, it became a subsidiary of American company S&P Global. The highest credit risk rating awarded to any company is ‘AAA’ and the lowest is ‘D’.
2. Which goods are consumed collectively by the community?
[A] Public Goods
[B] Consumer Goods
[C] Non-durable Goods
[D] Durable Goods
Show Answer
Correct Answer: A [Public Goods]
Notes:
Public goods are non-excludable and non-rivalrous commodities or services. They are made available to all members of society without direct payment. Examples include national defense, clean air, and street lighting. Governments usually fund public goods due to the free rider problem. Paul Samuelson formally defined public goods in 1954. Provision and maintenance typically rely on taxation and government administration.
3. The concept of weaker sections under ‘priority sector’ was introduced on the recommendation of which of the following committees?
[A] Krishnaswami Committee
[B] Varshney Committee
[C] Gadgil Committee
[D] Abid Hussain Committee
Show Answer
Correct Answer: A [Krishnaswami Committee]
Notes:
The term Priority Sector Lending was defined in the year 1972 by Krishnaswamy Committee. Initially banks were given an Priority sector lending target of 33.33%. But following the Krishnaswami Committee’s recommendations, the targets were raised to 40%.
4. During which five year plan The Khadi and Village Industries Commission was established ?
[A] First Five year Plan
[B] Second Five year Plan
[C] Third Five year Plan
[D] Fourth Five Year Plan
Show Answer
Correct Answer: B [Second Five year Plan]
Notes:
The Khadi and Village Industries Commission is a statutory body formed in April 1957 by the Government of India, under the Act of Parliament, ‘Khadi and Village Industries Commission Act of 1956’. It was second five year plan period then.
5. Consider the following:
- Foreign Direct Investments
- Foreign Institutional Investments
- American Depository Receipts
- Global Depository Receipts
In the context of “Sources of Foreign Exchange Reserves,” which of the above are placed under Portfolio Investment?
[A] 2, 3 and 4
[B] 1, 2 and 3
[C] 1 and 4
[D] 1 only
Show Answer
Correct Answer: A [2, 3 and 4]
Notes:
Portfolio investments comprise financial assets such as stocks, bonds, and depository receipts. Foreign Institutional Investments (FII), American Depository Receipts (ADR), and Global Depository Receipts (GDR) are all considered portfolio investments because they do not confer direct control over the underlying asset or enterprise, whereas Foreign Direct Investments involve ownership and control, and are not part of portfolio investment.
6. The term “cartelization” is mainly linked with which of the following groups?
[A] Small traders in local markets
[B] Independent firms formally agreeing to cooperate
[C] Individual investors in competitive markets
[D] Government-regulated monopolies
Show Answer
Correct Answer: B [Independent firms formally agreeing to cooperate]
Notes:
Cartelization describes independent firms entering formal agreements to control prices, limit supply, or divide markets. It typically involves actions such as price fixing or market-sharing. Cartelization is prohibited under the Competition Act, 2002 in India. In 2022, India’s Competition Commission imposed penalties on cement companies for cartelization. Cartels are illegal in many countries and are monitored by regulatory bodies to ensure market competition.
7. National Small Savings Fund is a part of which among the following?
[A] Consolidated Fund of India
[B] Public Account of India
[C] Contingency Fund of India
[D] Prime Minister’s Relief Fund
Show Answer
Correct Answer: B [Public Account of India]
Notes:
The National Small Savings Fund (NSSF) is part of the Public Account of India. The Public Account includes funds that the government holds on behalf of others, such as small savings schemes, provident funds, and other deposits. The NSSF primarily manages the savings from various small savings schemes like the Public Provident Fund (PPF) and the National Savings Certificate (NSC). These funds are used for financing government projects and development activities.
8. Which of the following is India’s first payments bank?
[A] Jio Payments Bank Ltd
[B] Paytm Payments Bank
[C] India Post Payments Bank
[D] Airtel Payments Bank
Show Answer
Correct Answer: D [ Airtel Payments Bank ]
Notes:
Fourth option is the correct answer. Airtel Payments Bank is India’s first payments bank.
9. Which Public Sector Giant issued world’s first Indian green masala bond?
[A] ONGC
[B] NTPC
[C] IOCL
[D] CIL
Show Answer
Correct Answer: B [NTPC]
Notes:
State-owned energy major National Thermal Power Corporation (NTPC) raised almost Rs 2,000 crores with the launch of its ‘Green Masala Bond’ on the London Stock Exchange (LSE). NTPC’s bond issue has been described as the first-ever Indian quasi-sovereign to issue a Masala Bond.
10. What is the classification of a Local Area Bank in India?
[A] Always Non-scheduled Bank
[B] Can be Scheduled or Non-scheduled Bank
[C] Always Scheduled Bank
[D] None of the above
Show Answer
Correct Answer: A [Always Non-scheduled Bank]
Notes:
Local Area Banks in India are small, region-specific banks created to serve limited geographic areas. They are classified as non-scheduled commercial banks and are not treated as scheduled banks under the Reserve Bank of India Act. Hence, a Local Area Bank remains a non-scheduled bank. This makes option 1 the correct answer. The key distinction is that scheduling depends on inclusion in the Second Schedule of the RBI Act, which does not apply to Local Area Banks.
