Indian Economy Mixed Quiz: Set 44

The correct answer is A, the Employees Provident Fund Organisation. It functions under the Ministry of Labour and Employment and administers three schemes under the Employees Provident Funds and Miscellaneous Provisions Act of 1952: the Employees Provident Fund Scheme of 1952, the Employees Pension Scheme of 1995 and the Employees Deposit Linked Insurance Scheme of 1976. Because these are covered by their own enactment, they fall outside the remit of the Pension Fund Regulatory and Development Authority, which regulates the National Pension System and pension schemes not covered by any other law. Option B is wrong because the Life Insurance Corporation is an insurer regulated by the insurance authority. Option C is wrong because the National Pension System Trust holds the assets of that system and is under the pension regulator. Option D is wrong because the General Insurance Corporation is the national reinsurer.

The correct answer is B, European Free Trade Association. TEPA was signed on 10 March 2024 in New Delhi with the four EFTA states, Iceland, Liechtenstein, Norway and Switzerland, and came into force on 1 October 2025. Option A is wrong because the European Union is a separate bloc of which none of the EFTA four is a member; India's negotiations with the European Union are a different track altogether and this is the commonest trap in the question. Option C is wrong because India has no bloc-level agreement with the Gulf Cooperation Council; its Gulf deal is a bilateral Comprehensive Economic Partnership Agreement with the United Arab Emirates alone. Option D is wrong because the agreement with ASEAN is the India-ASEAN Trade in Goods Agreement, which came into force in 2010, well before TEPA was even negotiated.

The correct answer is C, I and II. Statement I is right: commercial paper is an unsecured money market instrument issued in the form of a promissory note, so it is backed only by the credit standing of the issuer and not by any security. Statement II is right as well: commercial paper was introduced in the Indian money market in 1990, to let highly rated companies raise working capital directly instead of borrowing from banks. Statement III is wrong, and that is why B and D fail: commercial paper is issued by companies, primary dealers and all-India financial institutions, while the Reserve Bank only lays down the rules for its issue and acts as the regulator. The Reserve Bank issues treasury bills, but it does so on behalf of the Government of India. A is incomplete because it leaves out the correct statement about the year 1990.

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 C, 2013. The National Food Security Act, often called the Right to Food Act, was passed by Parliament in 2013 and converted the subsidised grain of the Targeted Public Distribution System from a scheme benefit into a legal entitlement, enforceable through a District Grievance Redressal Officer and a State Food Commission. A, 2005, is wrong, though it is the year of two other landmark laws, the Right to Information Act and the National Rural Employment Guarantee Act, which is why the option is attractive. B, 2009, is wrong because the year belongs to the Right of Children to Free and Compulsory Education Act. D, 2016, is wrong; no central food security law dates from that year, which saw the Insolvency and Bankruptcy Code instead. Note too that the Act was brought into force with effect from July 2013, which is why some sources give that month with the year.

The correct answer is A, the Public Private Partnership Appraisal Committee, usually written as PPPAC. It is the standing inter-ministerial committee that examines the concession agreement, the risk sharing and the financial structure of a central sector PPP proposal before approval, and its chair is the Secretary of the Department of Economic Affairs, with the secretaries of Expenditure, Legal Affairs, NITI Aayog and the sponsoring ministry as members. B, the Cabinet Committee on Economic Affairs, takes the final political decision on large projects but does not perform the technical appraisal. C is the body of chief ministers that guides NITI Aayog and has no project clearance role. D is a constitutional body under Article 280 that recommends the sharing of taxes between the Union and the States.

The correct answer is B, 100 billion US dollars over 15 years. Article 7.1 of TEPA commits the EFTA states to increase foreign direct investment in India by 50 billion US dollars in the first ten years and a further 50 billion in the following five years, a total of 100 billion over fifteen years, with the stated aim of generating one million direct jobs in India. This is the first time any free trade agreement signed by India has carried a binding investment commitment. Option A is wrong because 50 billion is only the first instalment of the pledge, not the whole of it. Option C is wrong because the period is fifteen years and not twenty-five. Option D is wrong because no figure of 200 billion appears anywhere in the agreement.

The correct answer is C, the Insolvency and Bankruptcy Board of India. Created under the Code of 2016, it registers and oversees insolvency professionals, insolvency professional agencies and information utilities, and makes the regulations under which the resolution process runs, which makes it both a regulator and a rule-maker. Option A is wrong because the Reserve Bank regulates banks and may direct them to refer accounts for insolvency, but it does not regulate insolvency professionals. Option B is wrong because the Securities and Exchange Board of India regulates the securities market. Option D is wrong because the Code is administered by the Ministry of Corporate Affairs rather than the Ministry of Finance, and in any case a ministry is not the statutory regulator here. Remember the pair: the Ministry of Corporate Affairs administers the Code and the Board is its statutory regulator, while the Reserve Bank stays the regulator of the banks that file the cases.

The correct answer is C, 74 per cent. The Insurance Amendment Act of 2021 amended the Insurance Act of 1938 to raise the permissible foreign direct investment in an Indian insurance company to seventy-four per cent, subject to conditions designed to keep management and control in Indian hands. Option A is wrong because twenty-six per cent was the original ceiling fixed when the sector was opened to private participation under the Act of 1999. Option B is wrong because forty-nine per cent was the intermediate ceiling set by the Insurance Laws Amendment Act of 2015, the same Act that renamed the regulator the Insurance Regulatory and Development Authority of India. Option D is wrong as a description of the 2021 Act, which stopped at seventy-four per cent. Learn the ladder as a sequence: 26 in 1999, 49 in 2015 and 74 in 2021.

The correct answer is B, fifty thousand rupees. MUDRA loans to non-farm micro enterprises are graded in three named categories: Shishu for loans up to fifty thousand rupees, Kishore for loans above fifty thousand and up to five lakh, and Tarun for loans above five lakh and up to ten lakh, with a higher slab added later for borrowers who have repaid an earlier loan. Option A is wrong because twenty-five thousand is not a MUDRA boundary. Option C is wrong because one lakh falls inside the Kishore range and is not the limit of any category. Option D is wrong because five lakh is the upper limit of Kishore and the lower limit of Tarun, a pairing examiners use as a distractor. All MUDRA loans are collateral-free and are given through banks and microfinance institutions.

The correct answer is C, M1 plus the net time deposits of commercial banks. M3, called broad money or aggregate monetary resources, is the measure the Reserve Bank watches most closely, and it adds the time deposits of the banking system to narrow money. A is wrong because currency with the public plus demand deposits is only a part of M1; M1 is currency with the public plus demand deposits of banks plus other deposits with the RBI, so the expression given is incomplete and in any case describes M1, not M3. B is wrong because M1 plus savings deposits with post office savings banks is the definition of M2. D is wrong because M1 plus total deposits with post office savings organisations is not a recognised aggregate; M4 is M3, not M1, plus total post office deposits other than National Savings Certificates. Remember the order of liquidity: M1 is the most liquid and M4 the least.

The correct answer is C, The Competition Act, 2002. Competition policy in India rests on the Competition Act of 2002, which was passed on the advice of the Raghavan Committee after liberalisation, and it replaced the older monopolies law. The Act forbids agreements that harm competition, such as cartels that fix prices or share markets, forbids the abuse of a dominant position, and requires large mergers and acquisitions to be cleared in advance. It is enforced by the Competition Commission of India, which was set up in 2003 and began hearing cases in 2009, with appeals going to the National Company Law Appellate Tribunal. Option A is wrong because the Companies Act of 2013 governs the formation and running of companies. Option B is wrong because the MRTP Act of 1969 was repealed when this Act came into force. Option D is wrong because the Consumer Protection Act of 2019 protects buyers against unfair trade practices. Exam tip: MRTP 1969 replaced by Competition Act 2002, regulator CCI.

The correct answer is A, 5 kg per person per month. The Act creates two categories of beneficiary. A priority household receives five kilograms of foodgrain for every member every month, so a family of five draws twenty-five kilograms. B, 35 kg per household per month, is the standing trap: that is the quantity for an Antyodaya Anna Yojana household, which is a household entitlement and does not change with the number of members. C, 10 kg per person per month, is wrong because no category under the Act carries that scale, although ten kilograms a family was the original quota of the Targeted Public Distribution System in 1997. D, 25 kg per household per month, is wrong, though it was the Antyodaya quota when the scheme began in 2000, before it was raised to thirty-five kilograms in 2002. So read the unit in each option carefully: per person in one case and per household in the other.

The correct answer is B, the General Agreement on Tariffs and Trade. GATT was signed in 1947 as a provisional agreement on tariff reduction, and after the Uruguay Round it was replaced on 1 January 1995 by the World Trade Organization, a permanent body with headquarters at Geneva and a binding dispute settlement system. India is a founder member. Option A is wrong because the International Monetary Fund, created at Bretton Woods in 1944, deals with exchange rates and balance of payments support and continues to exist. Option C is wrong because UNCTAD, set up in 1964, is a United Nations body that speaks for developing countries on trade and development and was never replaced. Option D is wrong because the World Bank, also born at Bretton Woods, lends for development projects and is a separate institution. The WTO agreements to remember are TRIPS, TRIMS, GATS and the Agreement on Agriculture.

The correct answer is B, ensure that concessions go only to goods genuinely produced in a partner country. Rules of origin test whether a product really originates with the partner, usually by requiring a change in its tariff classification there together with a minimum share of value added in that country. Without them a non-member could route its goods through a partner and claim duty concessions it never negotiated, a practice called trade deflection. Option A is wrong because a common external tariff is a feature of a customs union and has nothing to do with origin tests. Option C is wrong because the currency of settlement is a matter for payment arrangements, not for origin rules. Option D is wrong because origin rules concern goods, and no agreement caps the value of services in this way.

The correct answer is C, M3. The Reserve Bank of India publishes four measures of money supply, and M3 is the one called broad money, also known as aggregate monetary resources. It is made of currency with the public, demand deposits with banks, other deposits with the RBI and, above all, time deposits with banks. Adding time deposits captures almost all the money the banking system has created, which is why M3 is the figure policy makers watch. A is wrong because M1, currency plus demand deposits plus other deposits with the RBI, is narrow money, the most liquid measure of all. B is wrong because M2 is M1 plus savings deposits with post office savings banks, and it is still a narrow measure. D is wrong because M4 is M3 plus total post office deposits, the widest measure, but the name broad money belongs to M3. Exam tip: M1 and M2 are narrow, M3 and M4 are broad, and M3 is the benchmark.

The correct answer is B, 2 per cent. The Pradhan Mantri Fasal Bima Yojana, launched in 2016, fixes the farmer share of the premium at two per cent of the sum insured for kharif food and oilseed crops, with the rest of the actuarial premium shared by the central and state governments. Option A is wrong because one and a half per cent is the farmer share for rabi crops, the figure most often swapped with the kharif rate. Option C is wrong because five per cent applies to annual commercial and horticultural crops, which carry a higher risk. Option D is wrong because ten per cent is not a rate under this scheme at all. The three rates, two for kharif, one and a half for rabi and five for commercial and horticultural crops, are a standard one-mark question.

The correct answer is C, one year. By definition the money market is the market for short-term funds, and the dividing line drawn in India and everywhere else is a maturity of one year; anything longer belongs to the capital market. A is wrong because three months is only the tenor of the 91-day treasury bill, one instrument among many, and the market also trades 182-day and 364-day bills. B is wrong for the same reason: six months corresponds roughly to the 182-day bill and not to the limit of the market. D is wrong because a three-year instrument is a capital market security; dated government securities, debentures and bonds of such maturity are issued in the capital market and traded under SEBI's regulation. Fixing the one-year line in memory also answers questions on commercial paper and certificates of deposit, whose maximum maturity is one year.

The correct answer is B, up to 75 per cent of the rural and up to 50 per cent of the urban population. Those two ceilings together work out to about two-thirds of the country, and the Union Government fixes the state-wise coverage within them while the states identify the households. A is wrong because the figures are reversed and reduced; no provision of the Act carries fifty and twenty-five per cent. C is wrong because the Act deliberately moved away from the poverty line as the test: the priority category is wider than the old Below Poverty Line list, and identification is left to state criteria rather than to a poverty estimate. D is wrong because the Act is not universal; it excludes a part of the population, and a universal distribution system is what India had before the targeting of 1997.

The correct answer is B, 1 January 2006. SAFTA was signed at the twelfth SAARC summit held in Islamabad in January 2004 and came into force on 1 January 2006, replacing the earlier and far weaker South Asian Preferential Trading Arrangement of 1995. Option A is wrong because 2004 is the year of signature at Islamabad, not of entry into force, and this gap between signing and operation is the trap. Option C is wrong because 1 January 2010 is the date on which the India-ASEAN Trade in Goods Agreement and the India-South Korea Comprehensive Economic Partnership Agreement took effect. Option D is wrong because nothing of the kind happened in 2016; the SAARC summit scheduled for Islamabad that year was in fact called off.