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INDIAN ECONOMY
Q. No. Questions/Answers Marks
1. Which industry in India expanded due to the global demand for its 1
products in the late 19th century?
(a) Brewing (b) Leather-making (c) Jute mills (d) Paper-milling
Ans. (c) Jute mills
Reason: Jute mills expanded due to the pronounced global demand, reflecting
its pivotal role in the international market for ropes and other products in the
late 19th century.
Why other options are wrong?
✓ Brewing, Leather-making, Paper-milling are developing industries but
there is no indication of them expanding due to global demand, this likely
denotes that these industries were more aligned with fulfilling domestic
needs or did not have a broad international market during the specified
period.
2. At the time of Independence, what was India's predominant characteristic? 1
(a) Urban and Literate
(b) Rural and Literate
(c) Rural and Illiterate
(d) Urban and Illiterate
Ans. (c) Rural and Illiterate
Reason: At the time of independence, India was predominantly rural with an
overwhelmingly illiterate population, highlighting the prevalent socio-
economic conditions.
Why other options are wrong?
✓ Urban and literate segments were not predominant characteristics of the
Indian population at the time of Independence, reflecting the challenges in
education and urban development during that period.
3. Which model primarily influenced post-Independence Indian economic 1
policy?
(a) Gandhian Model (b) Nehruvian Model (c) Capitalistic Model (d) Swadeshi Model
Ans. (b) Nehruvian Model
Reason: Post-Independence, India adhered to the Nehruvian model which
focused on state-directed industrialization and socio-economic redistribution,
outlining the foundational strategy of economic policies.
4. What was the main purpose of the economic policies post-Independence? 1
(a) Rapid economic growth only
(b) Equity and distributive Justice only
(c) Rapid Economic Growth with Equity and Distributive Justice
(d) Centralized Economic Planning only
Ans. (c) Rapid Economic Growth with Equity and Distributive Justice.
Reason: The economic policies were meticulously crafted not just for economic
growth but also to ensure equity and distributive justice, portraying the holistic
approach to national development.
Why other options are wrong?
✓ The other options reflect partial goals and do not encapsulate the
comprehensive objectives of the economic policies which were aimed at
achieving a balanced and inclusive development, addressing both growth
and socio-economic disparities.
5. Who was responsible for developing, implementing, and monitoring the 1
five-year plans?
(a) The Government of India
(b) The Prime Minister's Office
(c) The Planning Commission

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(d) The Finance Ministry

Ans. (c) The Planning Commission
Reason: Planning Commission was specifically established to develop, execute,
and oversee the five-year plans, symbolizing the structured and focused
approach to economic planning and development.
Why other options are wrong?
✓ These entities, although integral parts of the governance structure, were
not the designated bodies for the specified tasks related to the five-year
plans, highlighting the specific role and responsibilities of the Planning
Commission in steering the economic development strategies.
6. Which sector was primarily emphasized in the early economic strategies 1
post-independence?
(a) Agriculture (b) Consumer Goods (c) Capital Goods (d) Small Scale Industry
Ans. (c) Capital Goods
Reason: Early economic strategies primarily focused on capital-intensive
projects like dams, power plants and heavy industrialization, depicting the
priority to build foundational industrial capabilities.
Why other options are wrong?
✓ Although important, were not the central emphasis of the early economic
strategies post-independence, reflecting a strategic choice to prioritize
foundational and infrastructural development over immediate consumer
needs and small-scale industries.
7. What was the cornerstone of Nehru’s development strategy post- 1
Independence?
(a) Small Scale Industries
(b) Agricultural Development
(c) Rapid Industrialization
(d) Foreign Investment
Ans. (c) Rapid Industrialization
Reason: Nehru’s development strategy was chiefly anchored in rapid
industrialization to modernize the economy, aligning with the vision to build a
robust industrial base.
8. Which policy resolution expanded the role of the public sector and granted 1
state monopoly in strategic areas?
(a) Economic Policy Resolution of 1950
(b) Industrial Policy Resolution of 1948
(c) Industrial Policy Resolution of 1956
(d) Trade Policy Resolution of 1958
Ans. (b) Industrial Policy Resolution of 1948
Reason: Industrial Policy Resolution was instrumental in expanding the role of
the public sector and establishing state monopoly in strategic areas, outlining
the regulatory framework for industrial development.
Why other options are wrong?
✓ The other mentioned resolutions either do not exist or did not specifically
expand the role of the public sector in strategic areas, indicating the unique
significance of the 1948 resolution in shaping industrial policies.
9. What was the average annual rate of growth of GDP in the first three 1
decades after independence?
(a) 5.5 percent (b) 3.5 percent (c) 4.5 percent (d) 2.5 percent
Ans. (b) 3.5 percent
Reason: The GDP growth rate for the first three decades post-independence
was 3.5 percent, often referred to as the ‘Hindu growth rate,’ illustrating the
modest pace of economic growth during that period.
10. Which two philosophies guided the policies in the 1950s? 1
(a) Gandhian and Nehruvian
(b) Capitalistic and Socialistic

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(c) Protectionist and Liberal

(d) Conservative and Progressive
Ans. (a) Gandhian and Nehruvian
Reason: The policies in the 1950s were principally shaped by Nehru’s vision of
a socialistic society with emphasis on heavy industry and the Gandhian
philosophy of small-scale and cottage industry, illustrating the amalgamation of
ideologies in policy formulation.
11. Which issue led to the gradual tightening of trade and reduction in 1
investment-licensing in the late 1950s?
(a) Industrial Expansion
(b) Balance of Payments Crisis
(c) Agricultural Decline
(d) Overpopulation
Ans. (b) Balance of Payments Crisis
Reason: Concerns related to a balance of payments crisis and foreign exchange
depletion led to a shift in policies to more restrictive trade and investment-licensing
regimes, showcasing the impact of economic constraints on policy decisions.
12. What did the undue priority for the public sector result in? 1
(a) Encouragement of Private Initiatives
(b) Expansion of Small-scale Industries
(c) Dampening of Private Initiative and Enterprise
(d) Boosting Foreign Investments
Ans. (c) Dampening of Private Initiative and Enterprise
Reason: The excessive emphasis and expansion of the public sector
discouraged private investments and initiatives, highlighting the constraints
and limitations faced by the private sector in a predominantly public sector-
driven economic framework.
Why other options are wrong?
✓ Other options do not correctly represent the consequences of the undue
priority given to the public sector, as the focus on the public sector
predominantly led to a restrictive environment for private enterprise and
initiatives.
13. What was the main agricultural strategy prior to the mid-1960s? 1
(a) Relying heavily on irrigation and R&D
(b) Depending on institutional models like land reforms
(c) Emphasizing on high-yielding seed varieties
(d) Focusing on bank nationalizations
Ans. (b) Depending on institutional models like land reforms
Reason: Before the mid-1960s, the agricultural policy primarily hinged on
institutional reforms, sidelining technocratic areas like irrigation and R&D.
Why other options are wrong?
✓ Other options, while relevant in the broader context, do not capture the
early focus of agricultural policies, underscoring the weightage given to
institutional change.
14. What event kick-started the 'green revolution' in India? 1
(a) Introduction of the MRTP Act, 1969
(b) Nationalization of banks
(c) Continuous monsoon failures and severe droughts in 1966 and 1967
(d) Wars in the 1960s and 1970s
Ans. (c) Continuous monsoon failures and severe droughts in 1966 and 1967.
Reason: These adverse events exposed the fragility of India's food security,
prompting the need for an agricultural overhaul, known as the 'Green
Revolution'.
Why other options are wrong?

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✓ Although other events were significant, they did not directly instigate the
'green revolution', emphasizing the urgency and impact of droughts on
policy changes.
15. What was a significant consequence of the interventionist policies in the 1
1960s?
(a) Rapid growth of the Indian economy
(b) Equitable distribution of wealth
(c) Major negative impact in the subsequent decade
(d) Encouragement of big business houses
Ans. (c) Major negative impact in the subsequent decade
Reason: The sweeping interventionist policies of the 1960s led to long-lasting
ramifications, affecting growth and productivity in the 1970s and beyond.
Why other options are wrong?
✓ Other options do not correctly capture the negative consequences of the
interventionist approach, highlighting the profound impact of the 1960s
policies on subsequent economic performance.
16. Which Act was directed at regulating large firms with considerable market 1
power?
(a) Agriculture Reform Act
(b) Bank Nationalization Act
(c) Foreign Trade Act
(d) Monopolies and Restrictive Trade Practices (MRTP) Act, 1969
Ans. (d) Monopolies and Restrictive Trade Practices (MRTP) Act, 1969
Reason: This Act aimed to curtail the power of large firms, imposing restrictions
on their operations, which hindered the expansion of significant business entities.
Why other options are wrong?
✓ Other Acts or policies were not focused on regulating large firms,
spotlighting the MRTP Act's unique role in limiting substantial market powers.
17. What external shocks in the 1960s and 1970s contributed to India's 1
decelerated growth?
(a) Introduction of high-yielding seed varieties
(b) Multiple wars and significant droughts
(c) Launch of the 'Green Revolution'
(d) Implementation of land reforms
Ans. (b) Multiple wars and significant droughts
Reason: The wars in 1962, 1965, and 1971 combined with major droughts,
especially in 1966 and 1967, were pivotal external shocks that hampered India's
economic progress during this period.
Why other options are wrong?
✓ While other aspects were part of India's economic and agricultural scene,
they were not the external shocks that directly led to decelerated growth.
18. How did the government react to the balance of payments crisis in the late 1
1950s?
(a) By focusing on high-yielding seed varieties
(b) Intensifying trade and reducing investment-licensing
(c) Prioritizing land reforms and farm cooperatives
(d) Nationalizing major industries
Ans. (b) Intensifying trade and reducing investment-licensing.
Reason: In response to the balance of payments crisis, the government
introduced stricter controls on trade and curtailed investment-licensing
associated with imports of capital goods.
Why other options are wrong?
✓ Other actions, while influential in various policy areas, were not the direct
responses to the balance of payments crisis.
19. Which policy in the 1960s and 1970s had a discouraging impact on private 1
investments and industrial growth?

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(a) Green revolution

(b) Emphasis on small scale and cottage industry
(c) Undue priority for public sector expansion
(d) Open foreign investment policy
Ans. (c) Undue priority for public sector expansion
Reason: Prioritizing the expansion of the public sector often at the cost of
private initiative was a factor that negatively influenced private investments,
stifling industrial growth.
Why other options are wrong?
✓ Other options were significant policy and economic aspects, but they did
not have the directly discouraging effect on private investments as the
excessive emphasis on public sector expansion did.
20. During which period is the term 'Hindu growth rate' associated with the 1
modest growth of India's GDP?
(a) 1947-1965 (b) 1950-1980 (c) 1960-1990 (d) 1975-2000
Ans. (b) 1950-1980
Reason: The period of 1950–1980 witnessed a modest annual GDP growth rate
of 3.5 percent, often referred to as the 'Hindu growth rate.'
21. What was the main objective behind the 1967 policy of reserving certain 1
products exclusively for small-scale industries?
(a) To compete in the world market for these products
(b) To encourage labour-intensive economic growth
(c) To promote stringent labour laws
(d) To make India self-sufficient in industrial goods
Ans. (b) To encourage labour-intensive economic growth
Reason: The 1967 policy was aimed at promoting small-scale industries by
reserving certain products for their exclusive manufacture, fostering labour-
intensive economic growth.
Why other options are wrong?
✓ Other options might be associated outcomes or components of the broader
industrial scenario, the direct objective of the policy was to promote
labour-intensive growth.
22. What negative consequence resulted from excluding big firms from 1
labour-intensive industries due to the reservation policy initiated in 1967?
(a) Big firms monopolized capital-intensive sectors
(b) Small-scale industries became technologically advanced
(c) India could not compete effectively in the global market for the products
(d) The organized sector saw rapid growth
Ans. (c) India could not compete effectively in the global market for the
products
Reason: With the exclusion of big firms from labour-intensive industries, India
lost the competitive edge in the global market for those reserved products.
Why other options are wrong?
✓ Other options represent different facets of the industrial landscape but
were not the direct consequence of excluding big firms from labour-
intensive sectors.
23. Which factor was not beneficial for fostering rapid growth in the 1
prevailing strict regime?
(a) Absence of stringent labour laws
(b) Availability of necessary incentives
(c) Adequate openness
(d) Exclusion of big firms from specific sectors
Ans. (c) Adequate openness
Reason: The strict regime did not have the required openness, which is a crucial
condition for rapid growth.
Why other options are wrong?

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✓ While stringent labour laws, necessary incentives, and the role of big firms
were part of the economic scenario, the main missing component hindering
rapid growth was the lack of openness in the regime.
24. What was one of the main objectives of the early liberalization in the 1
1980s in India?
(a) To establish SEBI
(b) To shift towards outward-oriented trade and investment practices
(c) To devalue the rupee
(d) To expand the OGL list
Ans. (b) To shift towards outward-oriented trade and investment practices
Reason: The early liberalisation aimed to divert from ‘inward-oriented’ trade
and investment practices, implying a shift towards more outward-oriented
practices.
Why other options are wrong?
✓ The other options are policies or actions taken during the era but were not
highlighted as primary objectives of early liberalization.
25. Which of the following was NOT introduced during the early reforms of the 1
1980s?
(a) Broad-banding
(b) Delicensing of industries
(c) Implementing a universal basic income
(d) Expanding the open general license (OGL) list
Ans. (c) Implementing a universal basic income
Reason: Implementing a universal basic income is not the part of 1980s
reforms.
Why other options are wrong?
✓ Broad-banding was mentioned as a policy introduced during the early
reforms of the 1980s. Delicensing of industries was also a part of the 1980s
reforms. The expansion of the open general license (OGL) list was
mentioned as a change during the 1980s.
26. What was the term used to describe the ad hoc and discreet nature of early 1
liberalization initiatives in the 1980s?
(a) Liberalization by illusion
(b) Reforms by stealth
(c) Quiet restructuring
(d) Silent economic revolution
Ans. (b) Reforms by stealth
Reason: The term ‘reforms by stealth’ was used to denote the ad hoc and not
widely publicized nature of early liberalization.
27. Why was the establishment of the Securities and Exchange Board of India 1
(SEBI) in 1988 significant during the 1980s reforms?
(a) To regulate the OGL list.
(b) To regulate the securities markets and protect investors.
(c) To manage the depreciation of the rupee.
(d) To oversee the delicensing of industries.
Ans. (b) To regulate the securities markets and protect investors.
Reason: SEBI was established to regulate securities markets and protect
investors, fitting the context of economic reforms.
Why other options are wrong?
✓ The other options, though related to economic aspects, do not correctly
represent the established role of SEBI in the Indian financial ecosystem.
28. By how much was the rupee depreciated from 1985-86 to 1989-s90 based 1
on the real effective exchange rate (REER)?
(a) 25.0% (b) 30.0% (c) 35.0% (d) 40.0%
Ans. (b) 30.0%
Reason: The rupee was depreciated by about 30.0 % from 1985–86 to 1989-90.

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29. What was the average annual growth rate of GDP during the seventh plan 1
period (1985-1990)?
(a) 4.8% (b) 5.3% (c) 5.7% (d) 5.8%
Ans. (d) 5.8%
Reason: The seventh plan period (1985-1990) had an average annual growth
rate of 5.8%.
30. Which policy initiative in the 1980s allowed firms in the engineering 1
industry to switch between different production lines without obtaining a
new license?
(a) Delicensing (b) Broad-banding (c) OGL listing (d) Asset limit raising
Ans. (b) Broad-banding
Reason: The 'broad-banding' policy was implemented to allow industry
groups to change their product mix without the need for fresh licensing.
Why other options are wrong?
✓ While related to industrial policy, the other options do not describe the
flexibility of product line switching without a new license.
31. Which of the following was NOT an objective of the early reforms in the 1
1980s?
(a) Removing constraints on growth
(b) Creating a more dynamic industrial environment
(c) Raising taxes
(d) Skillful exchange rate management
Ans. (c) Raising taxes
Reason: Raising taxes was not an objective mentioned for the early reforms, in
fact, the policies of cutting taxes further.
Why other options are wrong?
✓ Other options were among the objectives or methods of the early reforms.
32. Which body was established as a non-statutory entity on April 12, 1988? 1
(a) Reserve Bank of India
(b) National Stock Exchange
(c) Securities and Exchange Board of India (SEBI)
(d) Income Tax Department
Ans. (c) Securities and Exchange Board of India (SEBI)
Reason: SEBI was established as a non-statutory body on April 12, 1988
whereas other entities have different establishment reasons and dates.
33. What change was made regarding multipoint excise duties during the 1
early reforms of the 1980s?
(a) They were abolished entirely.
(b) They were increased for foreign goods.
(c) They were converted into a Modified Value-Added Tax (MODVAT).
(d) They were maintained as-is
Ans. (c) They were converted into a Modified Value-Added Tax (MODVAT).
34. Which of the following was a reason for the inhibited growth in the private 1
sector during the pre-reform era?
(a) Streamlined licensing policies
(b) Encouragement of foreign competition
(c) Excessive price and distribution controls
(d) High returns on investment in the public sector
Ans. (c) Excessive price and distribution controls
Reason: Excessive controls can stifle innovation and discourage investments
due to regulatory burdens.
Why other options are wrong?
✓ Streamlined policies typically facilitate growth, making it easier for
businesses to operate.

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✓ Encouragement of foreign competition is not correct because

encouraging foreign competition would likely lead to more competitive
domestic markets, not inhibit growth.
✓ High return on investment in the public sector is wrong as low returns in
the public sector would discourage, not encourage, private sector growth.
35. What was a major effect of the MRTP act on large industrial houses? 1
(a) Facilitation of foreign investments
(b) Creation of barriers for entry, diversification and expansion
(c) Promotion of foreign competition
(d) Ensuring high returns on domestic production
Ans. (b) Creation of barriers for entry, diversification and expansion
Reason: Restrictive conditions can inhibit business expansion and
diversification, making the market less competitive.
Why other options are wrong?
✓ Option (a) is incorrect because typically, acts that create barriers for local
industries do not simultaneously facilitate foreign investments.
✓ Option (c) is incorrect as promotion of foreign competition would reduce
barriers, not create them.
✓ Option (d) does not align with the nature of the MRTP act which aimed at
regulating, not ensuring profitability.
36. How did the reforms of the 1980s contribute to the mindset regarding 1
economic policy?
(a) They convinced policymakers that government intervention was always
necessary
(b) They demonstrated that markets should always supersede governmental
controls
(c) They fostered the belief that well-regulated competitive markets can ensure
economic growth
(d) They proved that the New Economic Policy of 1990 was ineffective
Ans. (c) They fostered the belief that well-regulated competitive markets can
ensure economic growth.
Reason: They fostered the belief that well-regulated competitive market can
ensure economic growth as globally, well-regulated markets have been shown
to foster competition, innovation, and growth.
Why other options are wrong?
✓ Option (a) is incorrect as over-reliance on government intervention can
lead to inefficiencies and market distortions, making the economy less
competitive.
✓ Option (b) is an oversimplification; while markets play a crucial role, the
role of the government in setting guidelines and ensuring fair play is also
essential.
✓ Option (d) is not accurate as evaluating a policy's effectiveness requires
comprehensive analysis over time, and one cannot judge it based on prior
reforms.
37. Which event in the 1990s put a significant strain on India's balance of 1
payments?
(a) The dot-com bubble burst
(b) The surge in oil prices due to the Gulf War
(c) The collapse of the Soviet Union
(d) The Asian financial crisis
Ans. (b) The surge in oil prices due to the Gulf War.
Reason: The Gulf War in 1990 caused a surge in oil prices, putting a severe
strain on many countries' balances of payments, including India's.
Why other options are wrong?
✓ The dot-com bubble burst affected mainly the tech stock market and had
its major impact in the early 2000s.

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✓ The collapse of the Soviet Union is not directly related to India's balance
of payments.
✓ The Asian financial crisis, while a significant event, happened later in the
decade and had different economic implications.
38. What was the level of foreign exchange reserves in India just before the 1
economic reforms?
(a) $5 billion (b) $500 million (c) $10 billion (d) $1.2 billion
Ans. (d) $1.2 billion
Reason: India's foreign exchange reserves were at a dire level of $1.2 billion just
before the economic reform.
39. Which institution did India rely on for external borrowing, which then set 1
conditions for further financial aid?
(a) The World Bank
(b) The International Monetary Fund (IMF)
(c) The Asian Development Bank
(d) The Reserve Bank of India
Ans. (b) The International Monetary Fund (IMF)
Reason: International Monetary Fund is the right answer as India depended
on external borrowing from the IMF, which imposed stringent conditions.
Why other options are wrong?
✓ The World Bank is not mentioned in the context of the 1991 reforms.
✓ The Asian Development Bank mainly focuses on developmental projects
and not emergency financial bailouts.
✓ The Reserve Bank of India is India's central banking institution, and would
not be the source of external borrowing.
40. The economic scenario combined with what other factor led to a 'crisis of 1
confidence' in the early 1990s?
(a) Booming private sector
(b) Rapid urbanization
(c) Fragile political situation
(d) Rise in technological advancements
Ans. (c) Fragile political situation
Reason: Economic challenges combined with a fragile political situation can
often lead to a lack of confidence among investors, consumers and the public.
Why other options are wrong?
✓ Option (a) would likely boost confidence rather than erode it.
✓ Option (b) is not directly mentioned or associated with the crisis.
✓ Option (d), while an important factor in long-term economic growth, is not
for the 'crisis of confidence' during this period.
41. What can be an outcome when government revenue expenditure 1
consistently exceeds revenue receipts in an economy?
(a) Reduction in investment in public welfare
(b) Possible high fiscal deficits
(c) Immediate economic boom
(d) Decline in public borrowing
Ans. (b) Possible high fiscal deficits
Reason: In general, economic terms, when a government spends more than it
earns, it often leads to fiscal deficits.
Why other options are wrong?
✓ Option (a) can be a result of the need to balance the budget but is not a
direct consequence.
✓ Option (c) is misleading, while expenditure can stimulate the economy,
consistent overspending without equivalent revenue is unsustainable.
✓ Option (d) is incorrect because governments might actually increase
borrowing to finance the deficit.
42. Why are healthy foreign exchange reserves crucial for a country? 1

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(a) To increase domestic interest rates

(b) To ensure a country can cover its import bills and manage economic downturn
(c) To directly fund public welfare programs
(d) To support local businesses against foreign competition
Ans. (b) To ensure a country can cover its import bills and manage economic
downturn.
Reason: Maintaining sufficient foreign exchange reserves ensures that a
country can manage its international liabilities and withstand shocks from
economic downturns.
Why other options are wrong?
✓ Option (a) is not a direct purpose of forex reserves.
✓ Option (c) is misleading, while reserves are a sign of economic health, they
are not used directly for welfare.
✓ Option (d) is an indirect benefit and not the primary purpose.
43. What is a long-term risk for an economy that relies heavily on external 1
borrowing?
(a) Surge in domestic tourism
(b) Decreased need for fiscal discipline
(c) Potential debt sustainability issues and higher interest obligations
(d) Immediate increase in foreign direct investment (FDI)
Ans. (c) Potential debt sustainability issues and higher interest obligations
Reason: Heavy external borrowing can lead to future debt obligations and
potential repayment challenges
Why other options are wrong?
✓ Surge in domestic tourism is not directly related to external borrowing.
✓ Decreased need for fiscal discipline is inaccurate, external borrowing
often requires more fiscal discipline due to obligations to creditors.
✓ FDI and external borrowing are different financial inflows.
44. What significant global event influenced the Indian policy reforms of 1991? 1
(a) Expansion of the European Union
(b) Economic boom in the United States
(c) Collapse of the Soviet Union and success of China's outward-oriented
policies
(d) Formation of the World Trade Organization
Ans. (c) Collapse of the Soviet Union and success of China's outward-oriented
policies.
Reason: The collapse of the Soviet Union and the success of China's outward-
oriented policies as lessons for Indian policymakers.
Why other options are wrong?
✓ The European Union's expansion or the economic situation in the US might
affect world economics but are not specifically influential to the 1991
reforms. The WTO promotes trade liberalization, but its formation was not
the direct impetus for India's 1991 shift.
45. What was the primary aim of the reforms instituted in 1991? 1
(a) Increase state intervention in the economy
(b) Move towards a market-oriented and externally open economy
(c) Focus solely on fiscal deficits
(d) Emulate China's socialist model
Ans. (b) Move towards a market-oriented and externally open economy
Reason: It encapsulates the overarching theme of the 1991 reforms:
transitioning from a state-controlled to a market-friendly economy while
focusing on external openness.
Why other options are wrong?
✓ Option (a) is incorrect because the aim was to reduce state intervention.
✓ Option (c) oversimplifies the reforms' objectives.
✓ Option (d) misrepresents China's model and the aim of the reforms.

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46. What triggered the momentum for the 1991 reforms? 1

(a) Rapid technological advancements
(b) Economic, fiscal and balance of payment crises
(c) A boom in domestic industries
(d) Increase in foreign direct investment
Ans. (b) Economic, fiscal and balance of payment crises
Reason: He reforms momentum stemmed from various economic challenges,
including fiscal problems and balance of payment crisis.
47. Which of the following best describes the Indian economy's orientation 1
before the 1991 reforms?
(a) Market-friendly
(b) Externally open
(c) Socialist model with predominant state intervention
(d) Dominated by foreign investments
Ans. (c) Socialist model with predominant state intervention
Reason: The state playing a central role in economic activities, often at the
expense of free-market dynamics.
Why other options are wrong?
✓ Market-friendly implies a laissez-faire approach that is not consistent with
the socialist model.
✓ Externally open typically means an economy receptive to foreign
investments and trade, but this was not a hallmark of India's socialist
model prior to 1991.
✓ Dominant by foreign investment suggests an economy heavily reliant on
foreign funds, which was not the primary characteristic of India's pre-1991
economy.
48. The 1991 reforms in India are popularly known as: 1
(a) Nationalization, decentralization, and internalization
(b) Liberalization, privatization and globalization
(c) Monetization, standardization, and secularization
(d) Optimization, realization, and modernization
Ans. (b) Liberalization, privatization and globalization
Reason: The 1991 reforms in India are popularly known as “New Economic
Policy” i.e., Liberalisation, Privatisation and Globalisation. Other options are not
terms associated with the 1991 reforms.
49. The reforms of 1991 were designed to transition India from: 1
(a) An open economy to a closed one
(b) A market-oriented economy to a state-controlled one
(c) A highly controlled economy to a market-friendly one
(d) A dominant global player to a more inward-focused nation
Ans. (c) A highly controlled economy to a market-friendly one.
Reason: Transitioning from a controlled to a market-friendly economy is a
common reform in many countries that seek economic growth through free-
market principles.
Why other options are wrong?
✓ An open economy to a closed one suggests an inward focus, which is usually
not seen as a growth-centric reform.
✓ A market-oriented economy to a state-controlled one is a reversal of what
many countries, including India, strive for in economic reforms.
✓ A dominant global player to a more inward focused nation misrepresents
the core essence of the reforms; being a dominant global player requires a
blend of both internal strength and external openness, neither of which
strictly defines India's pre-1991 state.
50. Why were the 1991 reforms structured as a core package of mutually 1
supportive reforms?
(a) To address technological lag

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(b) To tackle the balance of payment crisis and structural rigidities

(c) To promote cultural exchange
(d) To reduce foreign investments
Ans. (b) To tackle the balance of payment crisis and structural rigidities
Reason: Universally, addressing a balance of payment crisis and structural
rigidities is crucial for economic stability and growth. Addressing these issues
helps in achieving both short-term stability and long-term growth.
Why other options are wrong?
✓ To address technological lag might be a concern for some nations, but it
is not the most immediate concern during an economic crisis.
✓ To promote cultural exchange, while valuable, is not typically the direct
focus of financial reforms.
✓ Reducing foreign investments, goes against the principles of economic
openness and growth.
51. What was the primary reason for implementing fiscal reforms during the 1
crisis mentioned in the passage?
(a) To increase government expenditure
(b) To widen the current account deficit (CAD)
(c) To reduce the fiscal deficit and bring fiscal discipline
(d) To encourage money creation
Ans. (c) To reduce the fiscal deficit and bring fiscal discipline
Reason: To reduce the fiscal deficit and bring fiscal discipline mentions that
fiscal reforms were initiated to address the escalating fiscal deficit and bring
discipline to government finances.
52. What was one of the measures taken to achieve fiscal discipline during the 1
crisis?
(a) Increasing subsidies
(b) Expanding government expenditure
(c) Encouraging private sector participation
(d) Reducing transparency in the tax structure
Ans. (c) Encouraging private sector participation.
Reason: Encouraging private sector participation mentions that measures
included encouraging private sector participation to achieve fiscal discipline.
53. What was the historic agreement between the government and the 1
Reserve Bank of India in September 1994 primarily aimed at?
(a) Increasing government expenditure
(b) Financing deficit through money creation
(c) Reducing subsidies
(d) Bringing down the fiscal deficit
Ans. (d) Bringing down the fiscal deficit.
Reason: Bringing down the fiscal deficit states that the government entered into
a historic agreement with the Reserve Bank in September 1994 to bring down
the fiscal deficit in a phased manner.
54. Which of the following was NOT one of the measures mentioned in the 1
passage to achieve fiscal discipline during the crisis?
(a) Introduction of a stable and transparent tax structure
(b) Ensuring better tax compliance
(c) Expanding subsidies
(d) Reduction in subsidies
Ans. (c) Expanding subsidies
Reason: Expanding subsidies mentions reducing subsidies as one of the
measures to achieve fiscal discipline, not expanding them.
55. What was the primary objective of the monetary and financial sector reforms? 1
(a) Increasing government control over banks
(b) Reducing transparency in the financial system
(c) Making the financial system more efficient and transparent

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(d) Introducing more administrative constraints

Ans. (c) Making the financial system more efficient and transparent
Reason: The objective of the monetary and financial sector reforms was to
make the financial system more efficient and transparent. This objective aimed
at reducing the burden of non-performing assets, introducing competition and
deregulating interest rates to improve the efficiency and transparency of the
financial system.
56. Which of the following was NOT one of the measures as part of the 1
monetary and financial sector reforms?
(a) Introduction of prudential norms for accounting
(b) Liberalization of bank branch licensing policy
(c) Increasing reserve requirements
(d) Interest rate liberalization
Ans. (c) Increasing reserve requirements
Reason: Several measures taken as part of the monetary and financial sector
reforms, such as interest rate liberalization, opening new private sector banks,
liberalizing bank branch licensing policy, and introducing prudential norms for
accounting. However, it does not mention increasing reserve requirements, in
fact, the reforms involved a reduction in reserve requirements, as
recommended by the Narasimham Committee.
57. What did the Narasimham Committee recommend regarding reserve 1
requirements?
(a) Increasing Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR)
(b) Abolishing reserve requirements
(c) Maintaining reserve requirements at the same level
(d) Reducing reserve requirements
Ans. (d) Reducing reserve requirements
Reason: One of the measures in line with the recommendations of the
Narasimham Committee was the reduction in reserve requirements, including
Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR). Therefore, the
Narasimham Committee recommended reducing reserve requirements to make
the banking sector more efficient.
58. How did the reforms affect the banking sector in terms of competition? 1
(a) They reduced competition by limiting the number of banks
(b) They had no impact on competition
(c) They facilitated greater competition among various types of banks
(d) They eliminated competition among public sector banks
Ans. (c) They facilitated greater competition among various types of banks
Reason: The reforms included measures like opening new private sector banks,
liberalizing bank branch licensing policy, and facilitating greater competition
among public sector, private sector, and foreign banks. These measures aimed
to introduce competition and reduce administrative constraints in the banking
sector, thereby facilitating greater competition among various types of banks.
59. What is the primary mandate of the Securities and Exchange Board of 1
India (SEBI)?
(a) To control inflation (b) To manage fiscal policy
(c) To regulate the capital market (d) To oversee monetary policy
Ans. (c) To regulate the capital market
Reason: SEBI's primary mandate is to regulate the capital market in India. It
ensures that the capital market functions in a transparent and efficient manner,
which includes overseeing various aspects like securities trading, investor
protection, and maintaining fair and orderly markets.
Why other options are wrong?
✓ Options (a), (b) and (d) are incorrect because SEBI's role is primarily
related to capital markets and does not involve controlling inflation,
managing fiscal policy, or overseeing monetary policy.

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60. When did SEBI receive statutory recognition as an independent regulator 1

of the capital market?
(a) 1988 (b) 1990 (c) 1992 (d) 1994
Ans. (d) 1994
Reason: SEBI received statutory recognition as an independent regulator of the
capital market in 1992. This recognition granted SEBI the legal authority and
framework to regulate and oversee activities in the Indian capital market.
61. What was the main objective of the 'New Industrial Policy' announced by 1
the government in 1991?
(a) Promote agricultural growth
(b) Restrict industrial growth
(c) Promote growth of a more efficient and competitive industrial economy
(d) Encourage government monopolies
Ans. (c) Promote growth of a more efficient and competitive industrial
economy.
Reason: The primary objective of the 'New Industrial Policy' was to promote
the growth of a more efficient and competitive industrial economy. It aimed to
deregulate industry and remove unnecessary restrictions to encourage
economic growth.
Why other options are wrong?
✓ Options (a), (b) and (d) are incorrect because they do not accurately
represent the main objective of this policy.
62. How did the 'New Economic Policy' impact the licensing framework for 1
industries in India?
(a) It removed licensing restrictions for the majority of industries
(b) It increased licensing requirements for all industries
(c) It eliminated licensing for all industries
(d) It focused on licensing restrictions for the service sector
Ans. (a) It removed licensing restrictions for the majority of industries.
Reason: The 'New Economic Policy' put an end to the 'License Raj' and removed
licensing restrictions for the majority of industries, except for those related to
security and strategic concerns, social reasons, safety, and environmental
issues. Initially, 80 percent of industries were taken out of the licensing
framework, and later, only a few critical sectors remained under licensing.
Why other options are wrong?
✓ Options (b), (c) and (d) do not correctly describe the impact of the policy
on the licensing framework.
63. What was the main reason for limiting the public sector to only eight 1
sectors under the 'New Industrial Policy'?
(a) Economic efficiency
(b) Security and strategic grounds
(c) Promotion of monopolies
(d) Foreign investment
Ans. (b) Security and strategic grounds
Reason: The main reason for limiting the public sector to only eight sectors
under the 'New Industrial Policy' was based on security and strategic grounds.
The policy aimed to promote private sector participation and reduce the public
sector's monopoly in various industries.
Why other options are wrong?
✓ Options (a), (c) and (d) do not accurately represent the rationale behind
this decision.
64. How did the 'New Industrial Policy' affect Foreign Direct Investment (FDI) 1
in India?
(a) It discouraged all forms of FDI
(b) It banned foreign investment completely
(c) It imposed heavy taxes on foreign investors

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(d) It introduced automatic approval for FDI up to 51 percent and liberalized

FDI in most industries
Ans. (d) It introduced automatic approval for FDI up to 51 percent and
liberalized FDI in most industries.
Reason: The policy introduced automatic approval for foreign direct
investments (FDI) up to 51 percent and liberalized FDI in most industries,
except those reserved for the public sector.
65. What was the major change in India's external trade policy brought about 1
by the 'New Industrial Policy'?
(a) Elimination of all imports
(b) Imposition of heavy tariffs on imports
(c) Shifting from the 'positive list approach' to the 'negative list approach' for
import licensing
(d) No change in trade policy
Ans. (c) Shifting from the 'positive list approach' to the 'negative list approach'
for import licensing
Reason: The 'New Industrial Policy' shifted India's external trade policy from
the 'positive list approach' to the 'negative list approach' for import licensing.
This change meant that import licensing was required only for a handful of
goods, with most intermediate and capital goods being exempt from such licensing .
66. What was the highest tariff rate before the tariff reforms introduced by the 1
'New Industrial Policy'?
(a) 355% (b) 100% (c) 50% (d) 10%
Ans. (a) 355%
Reason: Before the tariff reforms introduced by the 'New Industrial Policy,' the
highest tariff rate in India was 355%. This policy significantly reduced tariff
rates over the years.
67. What was the significance of rupee devaluation under the 'New Industrial 1
Policy'?
(a) Rupee devaluation aimed to reduce exports
(b) Rupee devaluation by 18% against the dollar aimed to enhance export
competitiveness
(c) Rupee devaluation aimed to increase imports
(d) Rupee devaluation had no impact on trade
Ans. (b) Rupee devaluation by 18% against the dollar aimed to enhance export
competitiveness.
Reason: The rupee devaluation by 18% against the dollar under the 'New
Industrial Policy' aimed to enhance export competitiveness by making Indian
goods more affordable in international markets.
68. What was the outcome of the disinvestment of government holdings of 1
equity share capital of public sector enterprises under the 'New Industrial
Policy'?
(a) Public sector units became fully government-owned
(b) Public sector units were sold to foreign investors
(c) Public sector units gained greater autonomy in decision-making and
opportunities for professional management
(d) Public sector units were merged with private companies
Ans. (c) Public sector units gained greater autonomy in decision-making and
opportunities for professional management
Reason: The disinvestment of government holdings of equity shares capital of
public sector enterprises under the 'New Industrial Policy' resulted in public
sector units gaining greater autonomy in decision making and opportunities for
professional management.
69. What was one of the primary objectives of trade policy reforms in India? 1
(a) Encouraging import quotas
(b) Reducing tariffs and simplifying them

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(c) Implementing stricter licensing procedures for imports

(d) Increasing export duties
Ans. (b) Reducing tariffs and simplifying them
Reason: Reducing tariffs and simplifying them mentions that trade policy
reforms aimed at the "dismantling of quantitative restrictions on imports and
exports" and the "simplification of tariffs," which implies a focus on reducing
and simplifying tariffs.
70. What was the outcome of the Indian government's devaluation of the 1
rupee by 18-19 percent in July 1991?
(a) Rupee became stronger against major currencies
(b) Rupee's exchange rate remained unchanged
(c) Rupee's exchange rate became more volatile
(d) Rupee became weaker against major currencies
Ans. (d) Rupee became weaker against major currencies
Reason: The Rupee became weaker against major currencies in July 1991, the
Indian government devalued the rupee by 18-19 percent, which means the
rupee's value decreased relative to major currencies, making it weaker.
71. What exchange rate regime did India follow after March 1993? 1
(a) Fixed exchange rate system
(b) Managed floating exchange rate system
(c) Pegged exchange rate system
(d) Dual exchange rate system
Ans. (b) Managed floating exchange rate system
Reason: Managed floating exchange rate system mentions that in March 1993,
the Indian government unified the exchange rate and allowed the rupee to float.
This indicates that India adopted a managed floating exchange rate system.
72. Which of the following is NOT one of the observed changes in India's 1
economy over the last 31 years of economic reforms?
(a) Increased government market intervention
(b) Growth of private sector investment and initiatives
(c) High levels of international competitiveness in certain sectors
(d) Easier access to foreign technology, inputs, know-how and finance
Ans. (a) Increased government market intervention
Reason: Increased government market intervention states that India has
progressively moved towards a market-oriented economy with a reduction in
government's market intervention and controls. Therefore, increased
government market intervention is not one of the observed changes.
73. What has been the impact of reforms on sectors like banking, insurance, 1
and financial services in India?
(a) Decreased competition and customer choice
(b) Reduced investment and growth of private players
(c) Increased competition, customer choice and efficiency
(d) No impact on these sectors
Ans. (c) Increased competition, customer choice and efficiency
Reason: Increased competition, customer choice and efficiency mention that
reforms led to increased competition in sectors like banking, insurance, and
other financial services, leading to greater customer choice and increased efficiency.
74. What is one of the constraints faced by India? 1
(a) Low levels of fiscal deficit
(b) Low inflation rates
(c) High levels of debt as a share of GDP
(d) Low levels of foreign exchange reserves
Ans. (c) High levels of debt as a share of GDP
Reason: High levels of debt as a share of GDP mentions that India's debt is at
86 % of GDP in FY 21-22, which indicates a high level of debt as a share of GDP.

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75. What was the primary objective of replacing the Planning Commission 1
with NITI Aayog?
(a) To increase government control over public investment
(b) To strengthen the role of states in national development
(c) To centralize planning and budgeting processes
(d) To promote a command economy
Ans. (b) To strengthen the role of states in national development.
Reason: To strengthen the role of states in national development mentions that
one of the major objectives of replacing the Planning Commission with NITI
Aayog was to foster cooperative federalism by enhancing the voice and
influence of the states in national development.
76. What is one of the weaknesses or limitations of NITI Aayog? 1
(a) Lack of independence and power
(b) Control over expenditures and state plans
(c) Production of national plans
(d) Autonomy in budgeting processes
Ans. (a) Lack of independence and power
Reason: Lack of independence and power discusses that NITI Aayog lacks
autonomy and balance of power within the policy-making apparatus of the
central government, making it unable to act as a "counterweight" to address
development concerns.
77. Which of the following is NOT one of the key initiatives of NITI Aayog 1
mentioned in the passage?
(a) 'Life' to replace the prevalent 'use-and-dispose' economy
(b) National Data and Analytics Platform (NDAP)
(c) 'Make in India' campaign
(d) Shoonya campaign to improve air quality
Ans. (c) 'Make in India' campaign
Reason: 'Make in India' campaign mentions several key initiatives of NITI
Aayog, including 'Life,' NDAP, Shoonya campaign, 'Methanol Economy,' and
others, it does not mention the 'Make in India' campaign as one of its initiatives.
78. What is the primary focus of the 'Methanol Economy' program initiated by 1
NITI Aayog?
(a) Reducing greenhouse gas emissions
(b) Promoting electric vehicles
(c) Tapping into the potential of the gold sector
(d) Enhancing air quality in India
Ans. (a) Reducing greenhouse gas emissions
Reason: Reducing greenhouse gas emissions mentions that the 'Methanol
Economy' program aims at reducing India's oil import bill, Green-house Gas
(GHG) emissions, and converting coal reserves and municipal solid waste into
methanol.
79. What is the main role of the National Data and Analytics Platform (NDAP) 1
introduced by NITI Aayog?
(a) Facilitating access to Indian government data
(b) Promoting the 'Life' initiative
(c) Improving air quality in India
(d) Accelerating the deployment of electric vehicles
Ans. (a) Facilitating access to Indian government data
Reason: Facilitating access to Indian government data states that NDAP
facilitates and improves access to Indian government data.
80. What is the major shortcoming of NITI Aayog in the context of budgeting? 1
(a) Lack of autonomy (b) Lack of independence
(b) Control over expenditures (d) Production of national plans
Ans. (a) Lack of autonomy

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Reason: NITI Aayog lacks autonomy and balance of power within the policy-
making apparatus of the central government, which includes budgeting processes.
81. What percentage of India's population is directly dependent on 1
agriculture for a living?
(a) 18.8% (b) 25% (c) 47% (d) 70%
Ans. (c) 47%
Reason: It mentions that 47 percent of India's population is directly dependent
on agriculture for a living.
82. What is the primary objective of the 'Per Drop More Crop' (PDMC) Scheme? 1
(a) Increasing water use efficiency at the farm level
(b) Providing income support to farmers
(c) Promoting organic farming
(d) Improving market infrastructure
Ans. (a) Increasing water use efficiency at the farm level
Reason: The PDMC scheme aims to increase water use efficiency at the farm level.
83. What is the main role of the Agricultural and Processed Food Export 1
Development Authority (APEDA)?
(a) Providing credit to farmers
(b) Promoting organic farming
(c) Export promotion of agri-products
(d) Regulating agricultural markets
Ans. (c) Export promotion of agri-products
Reason: Export promotion of agri-products mentions that APEDA is entrusted
with the responsibility of export promotion of agri-products.
84. What has been the trend in private investment in agriculture? 1
(a) Decreased to 5% in 2020-21
(b) Remained constant at 9.3% in 2020-21
(c) Increased to 9.3% in 2020-21
(d) Not mentioned
Ans. (c) Increased to 9.3% in 2020-21
85. What is the primary reason for the dominance of small and medium 1
farmers in Indian agriculture?
(a) Lack of government support
(b) Fragmented landholdings and low farm productivity
(c) Market volatility
(d) High levels of mechanization
Ans. (b) Fragmented landholdings and low farm productivity.
Reason: Indian agriculture is dominated by small and medium farmers due to
small and fragmented landholdings, low farm productivity, and subsistence
farming.
86. What has been the trend in agricultural production in India? 1
(a) Decline in production (b) Sustained increase in production
(c) Stable production levels (d) Not mentioned
Ans. (b) Sustained increase in production.
Reason: The index numbers of agricultural production for various categories
show sustained increase in agricultural output.
87. What percentage of total gross value added in India does the industrial 1
sector contribute?
(a) 10% (b) 20% (c) 30% (d) 40%
Ans. (c) 30%
Reason: The Indian industry contributes about 30 percent of total gross value
added in the country.
88. Which sector accounts for the highest percentage of total production in 1
India's industrial sector?
(a) Heavy industries (b) Food processing (c) Manufacturing (d) Textiles
Ans. (c) Manufacturing

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Reason: Manufacturing is the most important sector and accounts for 78

percent of total production.
89. What is the primary focus of the "Make in India" initiative? 1
(a) Promoting tourism
(b) Boosting innovation in the IT sector
(c) Facilitating investment and manufacturing
(d) Encouraging agricultural exports
Ans. (c) Facilitating investment and manufacturing
Reason: "Make in India" is an initiative launched to facilitate investment, foster
innovation, and make India a hub for manufacturing.
90. What is the purpose of the "Remission of Duties and Taxes on Export 1
Products" (RoDTEP) scheme?
(a) To provide credit support to industries
(b) To promote innovation and research
(c) To boost exports by rebating all hidden duties and taxes
(d) To provide subsidies to small-scale industries
Ans. (c) To boost exports by rebating all hidden duties and taxes.
Reason: RoDTEP provides for a rebate of all hidden central, state, and local
duties/taxes/levies on the goods exported.
91. What is the main focus of the National Manufacturing Policy? 1
(a) To reduce the share of manufacturing in GDP
(b) To increase the share of manufacturing in GDP to 25%
(c) To promote the service sector
(d) To encourage import-dependent industries
Ans. (b) To increase the share of manufacturing in GDP to 25%
Reason: The National Manufacturing Policy aims to increase the share of
manufacturing in GDP to 25 percent by 2025.
92. What is the primary challenge mentioned for the industrial sector in 1
India?
(a) High levels of export competitiveness
(b) Favourable labour-management relations
(c) Shortage of efficient infrastructure and manpower
(d) Lack of global supply chain disruptions
Ans. (c) Shortage of efficient infrastructure and manpower
Reason: Shortage of efficient infrastructure and manpower mentions this as
one of the challenges to the industrial sector in India.
93. Which sector contributes the highest percentage to India's Gross Value 1
Added (GVA) among the primary, secondary, and tertiary sectors?
(a) Primary Sector (b) Secondary Sector (c) Tertiary Sector (d) None of the above
Ans. (c) Tertiary Sector
Reason: The tertiary sector is known for its significant contribution to GVA in
India rather than primary and secondary sector.
94. What is the primary focus of the "National Logistics Policy" (NLP) launched 1
in September 2022?
(a) Lowering the cost of logistics
(b) Promoting agricultural exports
(c) Increasing manufacturing output
(d) Simplifying import procedures
Ans. (a) Lowering the cost of logistics
Reason: Lowering the cost of logistics mentions that the National Logistics
Policy (NLP) aims to lower the cost of logistics and make it at par with other
developed countries.
95. Which government initiative aims at empowering Micro, Small & Medium 1
Enterprises (MSMEs)?
(a) Make in India
(b) PM Gati Shakti National Master Plan

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(c) Udyami Bharat

(d) FAME-India Scheme
Ans. (c) Udyami Bharat
Reason: The "Udyami Bharat" aims at the empowerment of Micro, Small &
Medium Enterprises (MSMEs).
96. What is the main objective of the "Public Procurement (Preference to 1
Make in India) Order, 2017"?
(a) To encourage imports of foreign goods
(b) To promote the service sector
(c) To boost industrial growth by giving preference to locally manufactured
goods
(d) To provide subsidies to the agricultural sector
Ans. (c) To boost industrial growth by giving preference to locally
manufactured goods.
Reason: To boost industrial growth by giving preference to locally
manufactured goods mentions that this policy gives preference to locally
manufactured goods, works, and services in public procurement to boost
industrial growth.
97. What are the key technologies associated with Industry 4.0? 1
(a) Internet of Things (IoT) and Machine Learning
(b) Artificial Intelligence (AI) and Cloud Computing
(c) Both (a) and (b)
(d) None of the above
Ans. (c) Both (a) and (b)
Reason: The industry 4.0 involves integrating new technologies such as cloud
computing, IoT, machine learning, and artificial intelligence (AI).
98. Which sector has the highest foreign direct investment (FDI) inflow in 1
India?
(a) Manufacturing Sector (b) Agriculture Sector (c) Service Sector (d) Mining Sector
Ans. (a) Manufacturing Sector
Reason: The FDI equity inflows in the manufacturing sector have been
progressively rising, indicating that it is an attractive hub for foreign
investments.
99. Which of the following best describes the unique trajectory of the post- 1
reform Indian economy?
(a) The shift from agriculture to industry
(b) The move from agriculture directly to the services sector
(c) The dominance of the manufacturing sector
(d) The decline of the agricultural and service sectors
Ans. (b) The move from agriculture directly to the services sector.
Reason: Unlike other nations where economic growth led to a shift from
agriculture to industries (or the primary sector to the secondary sector), India's
unique experience was to shift directly from agriculture to the services sector,
essentially by passing the secondary sector.
100. Which sector in India has experienced the fastest growth and has the 1
highest labour productivity?
(a) Agricultural sector (b) Manufacturing sector
(c) Service sector (d) Construction sector
Ans. (c) Service sector
Reason: The “service sector is the fastest growing sector in India and has the
highest labour productivity."
101. What was responsible for the significant growth of the services sector in 1
India?
(a) Slowdown in the agricultural sector
(b) Expansion of knowledge-based services
(c) Increase in FDI in the construction sector

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(d) Decrease in global demand for services

Ans. (b) Expansion of knowledge-based services.
Reason: The "exceptionally rapid expansion of knowledge-based services such
as professional and technical services has been responsible for the faster growth
of the services sector."
102. In the context of the WTO, where does India stand in terms of service 1
exports and imports?
(a) Not in the top 20
(b) Among the top 5
(c) Among the top 10
(d) Last in ranking
Ans. (c) Among the top 10
Reason: "India is among the top 10 World Trade Organization (WTO) members
in service exports and imports."
103. Why did India's services exports remain resilient during the Covid-19 1
pandemic?
(a) Decline in manufacturing exports
(b) Reduction in FDI
(c) Higher demand for digital support and digital infrastructure
modernization
(d) Increase in travel services
Ans. (c) Higher demand for digital support and digital infrastructure
modernization.
Reason: The resilience of India’s services exports during the Covid-19
pandemic was due to "the higher demand for digital support and need for digital
infrastructure modernization."

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