Indian Economy MCQs

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The National Social Assistance Programme was launched in 1995 during 8th five year plan as a Centrally Sponsored Scheme of the Government of India. The scheme provides financial assistance to the elderly, widows and persons with disabilities in the form of social pensions.

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Inflation Indexed Bonds (IIBs) are pegged to the Consumer Price Index (CPI). This means their interest payments and principal value adjust based on changes in the CPI, which measures the average change over time in the prices paid by consumers for goods and services. IIBs aim to protect investors from inflation, ensuring that the purchasing power of their returns is maintained. In India, the CPI is the primary measure for these bonds, while the Wholesale Price Index (WPI) measures price changes at the wholesale level and is not used for IIBs.

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The correct answer is EPFO (Employees’ Provident Fund Organisation). EPFO is India’s largest debt market investor, managing over ₹15 lakh crore in assets. It primarily invests in government securities and bonds, ensuring stable returns for its members. Established in 1952, EPFO plays a crucial role in the Indian economy by providing social security and retirement benefits to millions of workers.

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The correct answer is “Elimination of primary deficit.” The Fiscal Responsibility and Budget Management (FRBM) Act of 2003 primarily aimed to eliminate the revenue deficit and set targets for fiscal deficits. It also included provisions for non-borrowing from the Reserve Bank of India (RBI) except in emergencies. However, while it emphasizes reducing the primary deficit, it does not mandate its complete elimination. The Act was introduced to promote fiscal discipline and sustainable growth in India.

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The Directorate General of foreign Trade (DGFT) is the agency of the Ministry of Commerce and Industry of the Government of India, responsible for execution of the import and export Policies of India.

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Impetus to direct tax reforms in India, came with the recommendations of the Task Force on Direct & Indirect Taxes under the chairmanship of Vijay Kelkar in 2002. The main recommendations of this task force related to the direct taxes related to increasing the income tax exemption limit, rationalization of exemptions, abolition of long term capital gains tax, abolition of wealth tax etc.

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The Small Industries Development Organization (SIDO) is the national SME Development Agency of India. It is a major constituent of the Ministry of Small Scale Industries of the Government of India. It was Set up in 1954, SIDO provides services to small industry throughout the country by implementing a broad program of activities and services like Entrepreneurship Development, Tool Room Services, Testing Centres, Extension Services, R&D Services, etc.

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Foreign exchange reserves are crucial for a country’s economic stability. They facilitate external trade by providing the necessary currency for imports and exports. They also support orderly development by ensuring that a country can meet its international payment obligations. Additionally, reserves help maintain a stable foreign exchange market by allowing central banks to intervene in currency fluctuations. Countries like China and Japan hold important reserves to manage their economies effectively. Thus, the correct answer is “All of the above.”

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Debtors gain from inflation because they repay creditors with dollars that are worth less in terms of purchasing power. Anticipated inflation, inflation that is expected, results in a much smaller redistribution of income and wealth. Unanticipated inflation benefits government because government is a large debtor.

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The uncontrolled drain of wealth by the British depleted resources, worsening famines. From 1763–1856, over 40 major rebellions followed such crises. The Sanyasi Rebellion post-1770 Bengal famine exemplifies the link between exploitation and food crises during British rule.