Indian Economy MCQs

Notes:
FDI is not permitted in Real Estate Investment Trust (REIT) and Railway operation in India as of February 2026. However, the insurance sector now allows up to 100% FDI via the automatic route under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025. Thus, only statements 1 and 2 are correct regarding prohibition of FDI.

Notes:
First statement is correct. Adopt a Heritage project is a key initiative of Ministry of Tourism in close collaboration with Ministry of Culture and Archaeological Survey of India (ASI). Second statement is correct. The project aims to entrust heritage sites to the public sector and private sector companies and individuals for the development of tourist amenities. The private, public or individual entities holding the responsibility for development of a tourist site are treated as “Monument Mitras”. The basic and advanced amenities of the tourist destinations are being provided by them. Also, they hold the responsibility to look after the operations and the maintenance of the amenities.

Notes:
Alang is located in Bhavnagar district, Gujarat. It is recognized as the world’s largest ship-breaking yard. Alang consists of 183 ship breaking yards along 14 kilometers of coastline with a maximum capacity of 4.5 million Light Displacement Tonnage. As of 2024–25, Alang dismantles about 98% of ships broken up in India.

Notes:
Thermal power plants in India use large volumes of water mainly for cooling and steam production. The Central Electricity Authority monitors water consumption by thermal power stations annually. Compared to paper, textiles, and engineering, thermal power contributes the highest industrial water use. India’s thermal electricity generation capacity exceeds 230 GW as of 2023, making it the major industrial water consumer.

Notes:
Increased sales of government securities withdraw funds from banks, reducing reserves. Regulations mandating positive end-of-day central bank balances restrict available liquidity for lending or investment. Quantitative tightening by central banks reduces overall bank reserves as securities mature and are not reinvested. All these actions decrease liquidity in the banking system by shrinking available reserves.

Notes:
Amartya Sen, noted Nobel Laureate, has developed an index known as Sen Index to estimate the poverty.
The Global Multidimensional Poverty Index (MPI) was developed in 2010 by the Oxford Poverty & Human Development Initiative (OPHI) and the United Nations Development Programme and uses health, education, and standard of living indicators to determine the degree of poverty experienced by a population.
The poverty gap index is a measure of the intensity of poverty.

Notes:
In China and Russia, most decisions were made by the central government. This type of economy was the core of the communist philosophy. So both these economies are based on the socialist model. (Note: As of 2026, China maintains its socialist market economy under the Communist Party, while Russia retains centralized state control in key sectors despite market reforms.)

Notes:
The textile industry was the most affected due to the de-industrialization of the British. The British followed the systematic destruction of the Indian Industries. Indian textiles were banned in European markets and Indian markets were flooded with machine-made goods which destroyed the Indian industry.

Notes:
India faces underutilization of resources due to primitive techniques, capital shortage, and infrastructure issues. Manpower is generally adequate, but price sensitivities and demand barriers more directly impact utilization, especially in sectors like LNG and renewables. Manpower is not a primary limiting factor for resource utilization.

Notes:
Ratoon cropping is growing a fresh crop from the stubbles or suckers of the plant crop without replanting. It is also referred to as stubble cropping, re-harvesting. Sugarcane is cultivated by this method.