Indian Economy MCQs

Notes:
Accession Tax is levied on gifts and bequests received by heirs. This tax applies to the transfer of property upon death, ensuring that the government collects revenue from inherited assets. In many jurisdictions, it is part of estate or inheritance tax laws, which can vary importantly. For instance, in the U.S., estate taxes apply to estates exceeding a certain value, while some countries have specific inheritance taxes on gifts received.

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The main objective of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, was to eliminate the revenue deficit. This act aimed to ensure fiscal discipline by setting targets for the government to reduce its fiscal deficit and improve the overall financial health of the economy. The act mandates the government to present a medium-term fiscal policy and aims to enhance transparency in fiscal operations. It was introduced in response to rising fiscal deficits in the late 1990s and early 2000s, which posed risks to economic stability.

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Vertical farming is a greenhouse method of agriculture where commercially viable crops are cultivated inside multi-storey buildings in cities to simulate natural ecological systems. Using advanced greenhouse technology such as hydroponics and aeroponics, the skyscrapers could theoretically produce fish, poultry, fruit and vegetables. Since everything is ‘hydroponics’ in this practice, ie, in mineral solutions, the problems of soil erosion, pesticide toxicity are not there.

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The balance of payments (BOP) records all economic transactions between residents of a country and the rest of the world over a specific period. It includes: 1. Balance of Trade: The difference between exports and imports of goods and services. 2. Foreign Direct Investments (FDI): Investments made by a company or individual in one country in business interests in another country. 3. Foreign Indirect Investments: Investments in financial assets in another country, such as stocks and bonds. 4. Foreign Aid: Financial assistance given by one country to another. 5. Foreign Tourist Expenditures: Money spent by foreign tourists in the host country. Domestic Tourism Expenditures are not included in the BOP as they pertain to internal transactions. Thus, the correct answer is “Only 2, 3, 4 & 5.”

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Core Inflation is the rate of inflation calculated to exclude certain items that are subject to sudden and short-lived price movements, mainly food and energy. Core inflation is considered a better indicator of overall long-term than un-adjusted headline inflation.

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This question is based upon last year’s Economic Survey documents. It is based on the premise that the growth in tertiary sector cannot thrive if there is no growth in primary and secondary sector. Due to inter-sectoral linkages; revival of growth in services depends on growth revival in commodity producing sectors.

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Hashim Committee gave the criteria for identifying the urban poor or urban BPL families. The committee based its identification criteria on the parameters that were mapped by the Socio-Economic Caste Census (SECC).

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First statement is incorrect because the report is published annually by the International Food Policy Research Institute (IFPRI). The GHI is calculated by taking into account four key parameters: shares of undernourished population, wasted and stunted children aged fewer than 5, and infant mortality rate of the same age group. As per the report, child stunting in India is the major reason behind India’s worse ranking in the report.

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Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. It consists of Rep and Reverse Repo Rate.

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Indirect tax is essentially a tax on expenditure. Levies such as customs, excise and service tax / GST are examples of indirect taxes. They are considered regressive as they do not distinguish between the rich and the poor. So, most governments prefer to raise their revenues through direct taxes.