Indian Economy Mixed Quiz: Set 33

The correct answer is C, Tertiary sector. Banking produces no goods; it supports the making and selling of goods by taking deposits, lending and moving money, so it belongs to the tertiary or service sector. The economy is divided into three sectors by the kind of work done: the primary sector draws products straight from nature, the secondary sector turns those products into goods, and the tertiary sector provides services that help the other two. Transport, insurance, trade, communication, education, health and administration sit with banking in the tertiary sector, which is now the largest part of India's gross value added and keeps growing fastest. A is wrong because the primary sector covers farming, mining, fishing and forestry. B is wrong because the secondary sector covers manufacturing and construction. D is wrong because banking has no manufacturing side at all. Exam tip: primary gets it from nature, secondary makes it, tertiary serves it.

The correct answer is B, it is a price lower than the market price. Issue price is the subsidised rate at which grain from the government's buffer stock is sold through ration shops, and it is deliberately kept below the market price.

India's food security system works in three steps. The Food Corporation of India buys grain from farmers at the minimum support price, stores it as a buffer stock, and releases it to fair price shops under the public distribution system. The rate charged at those shops is the issue price, and the gap between what the government pays and what it charges is the food subsidy. Keeping the issue price low is exactly what makes grain affordable to poor households.

A is wrong: if it matched the market price there would be no subsidy and no reason for ration shops. C is wrong: the issue price is fixed by the government, not by the farmer. D is wrong: a price above the market rate would drive buyers away from ration shops altogether.

Exam tip: the farmer gets the MSP, the ration shop charges the issue price, and the difference between them is the food subsidy.

The correct answer is A, implicit price deflator. The deflator is nominal GDP divided by real GDP and multiplied by a hundred, so it is not computed from a fixed basket of goods at all; it is implied by the two GDP series, and that is exactly why it carries the word implicit. Option B is wrong because there is no index of that name, and the deflator is not built explicitly from price quotations. Option C is wrong because the standard term pairs implicit with price deflator, not with inflation index; the word index in economics is reserved for measures such as the CPI and the WPI. Option D is wrong for the same reason as B, since nothing explicit is used in its construction. Remember the one advantage of the deflator: it covers every good and service in GDP, not a selected basket.

The correct answer is D, Coal India Limited. Coal India, the largest coal producing company in the world, was granted Maharatna status in 2011 and remains on the list. Maharatna is the highest grade given to a central public sector enterprise, and the Department of Public Enterprises grants it only to a company that is already a Navratna, is listed on a stock exchange with the required public shareholding, and has a very large three-year average turnover, net worth and net profit. The grade matters because the board of a Maharatna can invest far larger sums in a single project on its own, without going back to the ministry for approval. Option A is wrong because Central Coalfields Limited is a subsidiary of Coal India and holds a much lower grade. Option B is wrong because Cochin Shipyard is a shipbuilder of a lower grade, not a Maharatna. Option C is wrong because the India Tourism Development Corporation is a small enterprise that has been shrinking through disinvestment. Exam tip: Maharatna status needs Navratna status plus stock market listing, and Coal India received it in 2011.

The correct answer is B, Washington D.C. The first summit at the level of heads of state and government was called in November 2008, when the collapse of large financial firms threatened the world economy, and it met at Washington. Option A is wrong because London hosted the second summit, in April 2009, which agreed on a large package of support through the International Monetary Fund. Option C is wrong because Pittsburgh hosted the third summit, in September 2009, at which the G20 declared itself the premier forum for international economic cooperation. Option D is wrong because Toronto hosted a summit in 2010. The sequence of the first three, Washington, London and Pittsburgh, is itself asked, so learn it in order along with the New Delhi summit of 2023.

The correct answer is C, Mahila Samriddhi Yojna. It is the micro-finance scheme under which women borrow small sums at a concessional rate of interest, so the rebate in interest is built into the scheme itself. It is run by the National Backward Classes Finance and Development Corporation under the Ministry of Social Justice and Empowerment, and the money reaches women through State Channelising Agencies and self-help groups, mostly for petty trade and self-employment. A parallel scheme is run for Scheduled Caste women by the National Scheduled Castes Finance and Development Corporation. Option A is wrong because the National Maternity Benefit Scheme paid a one-time cash grant to poor pregnant women and was later merged into Janani Suraksha Yojana. Option B is wrong because it is a pilot for social security cover, not a credit scheme for women. Option D is wrong because Raj Rajeshwari Mahila Kalyan Yojana is a personal accident insurance cover for women, not a loan. Exam tip: Mahila Samriddhi Yojana means micro-credit for women at a concessional interest rate, run by NBCFDC.

The correct answer is C, GNP at factor cost. Work through the expression in two steps. Adding depreciation to a net aggregate turns it gross, so NNP at market prices plus depreciation gives GNP at market prices. Subtracting net indirect taxes from a market price aggregate turns it into a factor cost aggregate, so the result is GNP at factor cost. Option A is wrong because it stops after the first step and ignores the subtraction of net indirect taxes. Option B is wrong because net national income at market prices is simply NNP at market prices, the aggregate we began with. Option D is wrong because nothing in the expression removes net factor income from abroad, and that is the only operation that could turn a national aggregate into a domestic one. Hold on to two rules: depreciation moves between net and gross, and net indirect taxes move between factor cost and market price.

The correct answer is B, NHB. The National Housing Bank is one of the central nodal agencies through which the Centre passes the interest subsidy of the Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana (Urban) down to the lenders. NHB settles the claims of housing finance companies and other primary lending institutions, HUDCO acts as the nodal agency for the rest, and the subsidy is credited upfront to the borrower's loan account so that the monthly instalment falls. NHB was set up in 1988 as the apex institution for housing finance in India; the regulation of housing finance companies moved to the Reserve Bank in 2019, but NHB still refinances them. Option A is wrong because CNA is only the abbreviation for central nodal agency, not an institution. Option C is wrong because a scheduled commercial bank lends under the scheme but does not route the subsidy. Option D is wrong because NABARD is the apex body for rural and agricultural credit. Exam tip: the PMAY Urban subsidy flows through NHB and HUDCO; NHB was set up in 1988.

The correct answer is A, the African Union. The New Delhi Leaders' Summit of September 2023, held under India's presidency at Bharat Mandapam, admitted the African Union as a permanent member, so that the group now has a second regional organisation alongside the European Union. Option B is wrong because ASEAN is invited to summits as a guest organisation but is not a member. Option C is wrong because the Commonwealth has no such place in the G20. Option D is wrong because the Arab League, like ASEAN, attends as an invited body in some years. The summit's theme, Vasudhaiva Kutumbakam, rendered as One Earth, One Family, One Future, and the declaration adopted there are asked in the same breath as this fact. The admission also meant that the group now carries two regional organisations rather than one, which is the point a statement-based question tests.

The correct answer is A, Marginal product curve. The marginal product of a variable factor first rises, reaches a peak and then falls, so the curve traced out is an inverted U. This is the law of variable proportions at work. In the first stage the extra units of labour get plenty of the fixed factor to work with and each one adds more to output than the last; at the peak the fixed factor is being used best; after that each extra worker has too little of the fixed factor, so the addition to output keeps shrinking and can even turn negative. B is wrong because the short run marginal cost curve is U-shaped, falling and then rising, as cost moves opposite to product. C is wrong because the average variable cost curve is U-shaped for the same reason. D is wrong because the long run average cost curve is a flatter U-shaped envelope of the short run curves. Exam tip: product curves are inverted U, cost curves are U.

The correct answer is D, Both I and II. Both statements state the same rule from opposite sides: national income is the value of final goods and services, and the value of intermediate goods is excluded so that the same output is not counted at every stage of production. Option A is wrong because statement I is also correct; leaving out intermediate goods is not an error but the central convention of national accounting. Option B is wrong because both statements are correct, as the value added method itself demonstrates. Option C is wrong because final goods, those bought for final use rather than for further processing or resale, are precisely what the accounts add up. Note that the same good can be intermediate or final depending on use: sugar bought by a bakery is intermediate, the same sugar bought by a household is final.

The correct answer is C, 1999. The Group of Twenty was formed in 1999, in the aftermath of the Asian financial crisis, as a forum where the finance ministers and central bank governors of the major advanced and emerging economies could discuss the stability of the world financial system. Option A is wrong because 1991 is the year of India's balance of payments crisis and of economic reform, not of the G20. Option B is wrong because 1995 is the year the World Trade Organization came into being, replacing the GATT. Option D is wrong, but it is the trap that catches most candidates: 2008 is the year the G20 was raised to the level of heads of state and government, when the first leaders' summit was held at Washington after the global financial crisis. Keep the two years apart as formation in 1999 and summit level in 2008.

The correct answer is B, Jim O'Neill. Jim O'Neill, then an economist at Goldman Sachs, used the acronym BRIC in a paper of 2001 to describe Brazil, Russia, India and China, the four large economies he expected to grow into a major share of world output. The term was an analyst's label before it became a political grouping with the first summit of 2009. Option A is wrong because Amartya Sen is known for his work on welfare economics, famine and the capability approach, and received the Nobel Prize in 1998. Option C is wrong because Joseph Stiglitz is known for the economics of information and his writing on globalisation. Option D is wrong because Raghuram Rajan was a chief economist of the International Monetary Fund and later Governor of the Reserve Bank of India. Only O'Neill is linked with the acronym.

The correct answer is A, 57 to 79. In the SDG India Index 2023-24, the fourth edition brought out by NITI Aayog in July 2024, the states' composite scores ran from 57 at the bottom to 79 at the top, with Uttarakhand and Kerala sharing the highest score of 79 and Bihar the lowest at 57. The index scores every state and union territory out of 100 on the seventeen Sustainable Development Goals, and a score of 100 would mean the 2030 targets are fully met. India's own composite score in that edition rose to 71 from 66 two years earlier. Options B, C and D are wrong because each moves one or both ends of the band: 85 and 90 are above the best state's score, and 52 is below the lowest, so no state falls there. Exam tip: SDG India Index 2023-24 — India 71, states 57 to 79, toppers Uttarakhand and Kerala, published by NITI Aayog.

The correct answer is B. The Survey is written in the Economic Division of the Department of Economic Affairs in the Ministry of Finance, under the overall supervision of the Chief Economic Adviser, and is laid before both Houses of Parliament, usually a day before the Union Budget. Option A is wrong because the Reserve Bank publishes its own documents, such as the Annual Report, the Monetary Policy Report and the Report on Trend and Progress of Banking in India, but not the Economic Survey. Option C is wrong because NITI Aayog is a policy think tank for the government and does not author the Survey. Option D is wrong because the National Statistical Office compiles the statistics, including the national accounts, which the Survey then uses and interprets. Remember also that the Survey is a convention, not a requirement of the Constitution.

The correct answer is A, Small Industries Development Bank of India. SIDBI is the apex institution for micro, small and medium enterprises.

It was set up in 1990 under an Act of Parliament, began work on 2 April that year, and has its head office at Lucknow. It started as a subsidiary of IDBI and became independent later. SIDBI does not usually lend directly in small amounts; it refinances banks, state finance corporations and microfinance institutions, and runs funds such as the Fund of Funds for Startups and the credit guarantee scheme for small units along with the government. It also publishes the MSME Pulse report.

Options B, C and D change one word each and are simply not the name of any institution. The trap is the pair small and service: SIDBI is about small industries, the sector that employs the most people after agriculture.

Exam tip: SIDBI 1990, Lucknow, MSMEs; NABARD 1982, Mumbai, agriculture and rural credit.

The correct answer is B, Yekaterinburg. The leaders of Brazil, Russia, India and China met for the first summit of the grouping at Yekaterinburg in Russia in June 2009, turning an analyst's acronym into a working forum. Option A is wrong because Brasilia hosted the second summit, in 2010. Option C is wrong because Sanya in China hosted the summit of 2011, which was the first attended by South Africa after it joined, so that meeting is remembered as the first BRICS summit. Option D is wrong because Durban in South Africa hosted the summit of 2013, where the plan for a development bank was carried forward. Candidates often answer Sanya here, so fix the distinction: first BRIC summit at Yekaterinburg and first BRICS summit at Sanya.

The correct answer is C, Dadabhai Naoroji. He estimated India's national income for the year 1867-68 and used the figure in his argument about the drain of wealth from India under British rule, which is why he is remembered as the first to attempt the exercise. Option A is wrong, though it is the closest distractor: V. K. R. V. Rao's estimate for 1931-32 is regarded as the first scientific estimate, because it applied a consistent method to the whole economy. Option B is wrong because P. C. Mahalanobis chaired the National Income Committee set up in 1949, which created the official framework, and he is better known as the statistician behind the Second Five Year Plan. Option D is wrong because R. C. Desai's estimate came in the 1930s as well, after Naoroji. Keep the chain in order: Naoroji first, Rao scientific, Mahalanobis official.

The correct answer is B, South Africa. South Africa was invited to join in 2010 and took part in the summit at Sanya in China in 2011, and the letter S was added to the acronym to make BRICS. The move gave the grouping a presence on the African continent. Option A is wrong, although Saudi Arabia was among the countries invited at the Johannesburg summit of 2023, when the group agreed on a wider membership from 2024; the question here is about the step that created the name BRICS. Option C is wrong because Indonesia is a member of the G20 and of ASEAN, and its relationship with BRICS came much later. Option D is wrong because Argentina, also a G20 member, did not take up the invitation of 2023. Keep 2010 as the year of the S in BRICS.

The correct answer is B, P. C. Mahalanobis. The National Income Committee was appointed in 1949 with Professor P. C. Mahalanobis as chairman and Professor D. R. Gadgil and Dr V. K. R. V. Rao as members; its reports in the early 1950s produced the first official estimates of national income for independent India and shaped the work of the Central Statistical Organisation, today the National Statistical Office. Option A is wrong because D. R. Gadgil was a member, not the chairman, and is separately remembered for the Gadgil formula for the distribution of plan assistance to States. Option C is wrong because V. K. R. V. Rao was also a member, known for the scientific estimate of 1931-32. Option D is wrong because Dadabhai Naoroji belonged to the nineteenth century and died long before independence.