Indian Economy MCQs
1. The Indian Economy is best described as a:
India follows a mixed economy model where both public (government) and private sectors co-exist and contribute to economic development.
2. Which sector contributes the most to India's GDP?
The Service (Tertiary) sector is the largest contributor to India's Gross Domestic Product (GDP).
3. Who is the ex-officio Chairman of the NITI Aayog?
The Prime Minister of India serves as the ex-officio Chairperson of the NITI Aayog.
4. The economic reforms (LPG model) were introduced in India in which year?
Liberalization, Privatization, and Globalization (LPG) reforms were initiated in 1991 under Finance Minister Dr. Manmohan Singh.
5. Which body estimates the National Income of India?
The NSO (formerly CSO) under the Ministry of Statistics and Programme Implementation estimates National Income.
6. Goods and Services Tax (GST) was implemented in India on:
GST is a comprehensive indirect tax on manufacture, sale, and consumption of goods and services, implemented on July 1, 2017.
7. Which sector provides the highest employment in India?
While the service sector contributes most to GDP, the agriculture sector still employs the largest portion of the Indian workforce.
8. Who signs the One Rupee currency note in India?
One rupee notes are issued by the Ministry of Finance and bear the signature of the Finance Secretary, unlike other notes signed by the RBI Governor.
9. The Reserve Bank of India (RBI) was nationalized in which year?
The RBI was established in 1935 but was nationalized on 1st January 1949.
10. Which type of unemployment is most common in the agricultural sector in India?
This occurs when more people are employed in a job than are actually needed, which is very common in Indian agriculture.
11. 'Green Revolution' in India is associated with the production of:
The Green Revolution, initiated in the 1960s, significantly increased the production of food grains, especially wheat and rice.
12. Which institution regulates the Capital Market (Stock Market) in India?
The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India.
13. The concept of 'Five Year Plans' in India was borrowed from which country?
India adopted the concept of economic planning and Five Year Plans from the former Soviet Union.
14. What does 'Repo Rate' mean?
Repo Rate is the interest rate at which the Reserve Bank of India lends money to commercial banks.
15. The 'Mahalanobis Model' was associated with which Five Year Plan?
The Second Five Year Plan (1956-61) focused on heavy industrialization and was based on the P.C. Mahalanobis model.
16. NABARD is associated with the development of:
National Bank for Agriculture and Rural Development (NABARD) is the apex development financial institution for agriculture and rural development.
17. Which committee was constituted to estimate poverty in India?
The Suresh Tendulkar Committee was constituted to review the methodology for estimation of poverty.
18. 'Fiscal Policy' in India is formulated by:
Fiscal policy relates to government revenue and expenditure and is formulated by the Finance Ministry.
19. 'Operation Flood' is related to:
Operation Flood was the world's largest dairy development program and led to the White Revolution.
20. The first bank managed by Indians was:
Oudh Commercial Bank (established in 1881) was the first commercial bank in India having limited liability and managed entirely by Indians. (PNB was est. 1894).
📘 Indian Economy – Overview and Structure
🔹 Introduction
The Indian economy is one of the fastest-growing major economies in the world. It is a mixed economy that combines features of both capitalism and socialism. With a large population, diverse natural resources, and a vibrant service sector, India has emerged as a global player in terms of economic development and trade. Understanding its structure, key features, and challenges is essential for any student preparing for competitive exams like UPSC, SSC, and JKSSB.
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🔹 Key Features of the Indian Economy
- Mixed Economy: Both public and private sectors play significant roles.
- Agrarian Base: A large part of the population depends on agriculture for livelihood.
- Service Sector Dominance: Major contributor to India’s GDP – includes IT, banking, and telecom.
- Demographic Advantage: Young and large working population offering huge human capital potential.
- Large Domestic Market: High internal consumption drives demand and production.
- Global Integration: Liberalization since 1991 opened Indian markets to global trade and investment.
🔹 Sectors of Indian Economy
The Indian economy is broadly classified into three sectors:
- Primary Sector: Agriculture, fishing, forestry, mining – contributes to rural employment.
- Secondary Sector: Manufacturing and industries – involves processing of raw materials.
- Tertiary Sector: Services like banking, insurance, education, and tourism – fastest growing.
🔹 Economic Indicators of India
| Indicator | Value/Status (as of 2024) |
|---|---|
| GDP (Nominal) | $3.7 trillion approx. |
| GDP Rank (World) | 5th Largest |
| Population | ~1.43 billion (second largest globally) |
| Major Sectors | Services (53%) > Industry (25%) > Agriculture (22%) |
| Inflation Rate | ~5-6% |
| Unemployment Rate | ~7-8% |
🔹 Economic Challenges
- Unemployment: Both rural and urban areas face job scarcity, especially among youth.
- Poverty: Despite growth, income inequality and poverty persist in many regions.
- Infrastructure Gaps: Issues in transport, logistics, power, and rural connectivity.
- Dependency on Agriculture: Over-reliance on monsoon, low productivity, disguised unemployment.
- Fiscal Deficit: High government expenditure compared to revenue inflow.
🔹 Government Role in Economy
- Provides infrastructure and public goods like roads, health, education.
- Implements welfare schemes for poverty alleviation and social justice.
- Regulates markets through monetary policy (RBI) and fiscal policy (Ministry of Finance).
- Promotes FDI, exports, and ease of doing business to integrate with the global economy.
🔹 Recent Economic Developments
- Digital Economy: Rise of digital payments (UPI), e-commerce, and fintech innovation.
- Start-Up Ecosystem: India has over 100 unicorns, showing growth in entrepreneurship.
- Production Linked Incentives (PLI): For boosting manufacturing and exports.
- Green Growth: Increased focus on renewable energy and climate finance.
🔹 MCQs – Practice Questions
- Q1: India is considered a:
👉 A. Mixed economy ✅ - Q2: Which sector contributes most to India’s GDP?
👉 A. Services ✅ - Q3: What is India's rank in global GDP (nominal) as of 2024?
👉 A. 5th ✅
🔹 FAQs – People Also Ask
- Q: What type of economy is India?
A: India follows a mixed economy model. - Q: Which sector employs the most people in India?
A: Agriculture (Primary Sector). - Q: What are India’s key economic challenges?
A: Unemployment, poverty, inflation, and infrastructure gaps.
🖚 Conclusion
The Indian economy is vast, complex, and rapidly transforming. With its strengths in the service sector, growing digital infrastructure, and government initiatives like Digital India and Atmanirbhar Bharat, the country aims to become a $5 trillion economy soon. However, challenges such as poverty, unemployment, and fiscal imbalance must be addressed through sustainable, inclusive, and innovative policy measures.