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. What is India's commitment on the number of new branches that foreign banks may open in a year under WTO GATS, and what is the corresponding branch commitment in the India–EU FTA?
[A] 12 branches per year under WTO GATS; 15 branches over four years under the India–EU FTA
[B] 15 branches per year under WTO GATS; 12 branches over four years under the India–EU FTA
[C] 12 branches per year under WTO GATS; 20 branches over four years under the India–EU FTA
[D] 20 branches per year under WTO GATS; 15 branches per year under the India–EU FTA
Show Answer
Correct Answer: A [12 branches per year under WTO GATS; 15 branches over four years under the India–EU FTA]
Notes:
India’s WTO commitment under GATS limits market access for foreign bank branches to 12 branches in a year for all foreign banks taken together. In the India–EU FTA financial services offer, the branch licensing framework is more liberal and allows up to 15 bank branches to be established over a four-year period. The two figures apply to different trade arrangements, so they should not be read as the same annual cap.
2. What percent of India's external debt did commercial borrowings comprise by March 2025?
[A] Decreased due to multilateral borrowing
[B] Nearly 40%, the largest component
[C] Remained constant at 27%
[D] Replaced by NRI deposits
Show Answer
Correct Answer: B [Nearly 40%, the largest component]
Notes:
As per the RBI’s external debt data for end-March 2025, commercial borrowings accounted for 39.6% of India’s total external debt. This made them the single largest component among all external debt categories. The category includes loans raised from abroad by Indian borrowers and is an important part of India’s external liability profile. Hence, the correct choice is the one indicating nearly 40% and the largest component.
3. In India, Tank irrigation is more common in which of the following regions?
[A] Rocky plateu regions with uneven and highly seasonal rainfalls
[B] Regions with presence of perennial rivers and plenty of rainfall
[C] Arid and Semi Arid regions with scanty rainfallÂ
[D] Coastal regions with regular rainfallÂ
Show Answer
Correct Answer: A [Rocky plateu regions with uneven and highly seasonal rainfalls]
Notes:
The Tank irrigation is more in the rocky plateau area of the county, where the rainfall is uneven and highly seasonal. The Eastern Madhya Pradesh, Chhattisgarh, Orissa, Interiors of Tamil Nadu and some parts of Andhra Pradesh have more land under tank irrigation.
4. Which port exports the highest value of seafood from India?
[A] Visakhapatnam
[B] Tuticorin
[C] Kochi
[D] Jawaharlal Nehru Port Authority (JNPT)
Show Answer
Correct Answer: A [Visakhapatnam]
Notes:
Visakhapatnam Port handled 2.19 billion or 29.72% of India’s seafood exports in FY24. In FY25, Visakhapatnam’s seafood export value exceeded 2 billion out of India’s total 7.45 billion. The port exported 314,199 tonnes, while JNPT exported 240,253 tonnes valued at 779.49 million. Andhra Pradesh’s aquaculture, mainly Vanammei shrimp, supports Visakhapatnam’s status as the top exporter.
5. What is amortization in banking?
[A] A lump-sum repayment of loan at maturity
[B] Gradual repayment with both principal and interest
[C] Payment of interest only, principal at end
[D] Writing off intangible asset expenses
Show Answer
Correct Answer: B [Gradual repayment with both principal and interest]
Notes:
Amortization refers to scheduled loan repayment through periodic payments including both principal and interest. Each payment gradually reduces the outstanding loan balance. Early payments cover more interest; later ones pay more principal. Mortgages and term loans typically follow an amortization schedule with set time frames like 15 or 30 years. The balance decreases with every regular installment.
6. Which state ranked first in India’s 2019 ease of doing business assessment?
[A] Gujarat
[B] Uttar Pradesh
[C] Telangana
[D] Andhra Pradesh
Show Answer
Correct Answer: D [Andhra Pradesh]
Notes:
Andhra Pradesh secured the top position in the Business Reforms Action Plan (BRAP) 2019 assessment for ease of doing business in India. The assessment was conducted jointly by the Department for Promotion of Industry and Internal Trade and the World Bank. Andhra Pradesh implemented 100% of the reforms suggested under BRAP 2019. This ranking was released in September 2020.
7. Consider the following statements regarding the Asian Infrastructure Investment Bank (AIIB):
- India participated in the founding of the bank and signed the Memorandum of Understanding in October 2014.
- The headquarters of the AIIB are located in Beijing, China, specifically at the Asia Financial Center in the Olympic Forest Park area.
- The AIIB currently has over 100 member states from around the world.
Which of the above statements is/are correct?
[A] Only 1
[B] 1 and 2 only
[C] 2 and 3 only
[D] 1, 2 and 3
Show Answer
Correct Answer: D [1, 2 and 3]
Notes:
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.
8. In what form do banks maintain CRR with the RBI?
[A] Cash
[B] Government Securities
[C] Gold
[D] All of the above
Show Answer
Correct Answer: A [Cash]
Notes:
CRR requires banks to hold a specified percentage of their deposits as liquid cash with RBI; no securities or gold are allowed.
9. What is investment by foreign investors in Indian company shares and bonds called?
[A] Foreign Direct Investment (FDI)
[B] Foreign Portfolio Investment (FPI)
[C] Domestic Institutional Investment (DII)
[D] Non-Resident Indian (NRI) Investment
Show Answer
Correct Answer: B [Foreign Portfolio Investment (FPI)]
Notes:
Foreign Portfolio Investment (FPI) refers to investment by foreign investors in financial assets such as shares, bonds and other securities in India. Such investment is generally made without seeking management control over the company. This is different from Foreign Direct Investment (FDI), which involves a lasting interest and often some degree of control in the enterprise. Hence, foreign investment in listed shares and bonds is classified as FPI.
10. Why was Indian cotton industry inferior to England’s during British rule? (UPSC Prelims 1983)
[A] Plenty of raw material was available
[B] Lack of skilled technicians and managers
[C] Large and increasing domestic market
[D] India was traditional home for textiles
Show Answer
Correct Answer: B [Lack of skilled technicians and managers]
Notes:
Indian cotton industry lagged due to absence of skilled technicians and managers, and lack of industrial revolution, unlike England, hindering technological advancement and efficient management in the textile sector during the British rule.
