Nature of Indian Economy

11. Which one of the following policies/programmes refers to ‘Self-reliant

Which one of the following policies/programmes refers to ‘Self-reliant India’ or ‘Self-sufficient India’ for making India a bigger and more important part of the global economy ?

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Sarva Shiksha Abhiyan
National Health Mission
Mahatma Gandhi National Rural Employment Guarantee Scheme
Atmanirbhar Bharat
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UPSC Combined Section Officer – 2021-22
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The correct answer is D. The term ‘Self-reliant India’ or ‘Self-sufficient India’ directly refers to the Atmanirbhar Bharat Abhiyan.
Atmanirbhar Bharat Abhiyan (Self-Reliant India Movement) is a policy initiative launched by the Government of India in response to the COVID-19 pandemic. Its objective is to make the country and its citizens independent and self-sufficient across various sectors of the economy by boosting domestic production and reducing reliance on imports, while also aiming to integrate India more strongly into the global economy.
Sarva Shiksha Abhiyan is a program aimed at universalizing elementary education. The National Health Mission is a comprehensive health program encompassing rural and urban health missions. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) guarantees 100 days of wage employment in a financial year to adult members of rural households willing to do unskilled manual work. None of these directly translate to or primarily focus on ‘Self-reliant India’ in the broad economic sense intended by the question.

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12. Which one of the following economic reforms was introduced in India in

Which one of the following economic reforms was introduced in India in 1991 to liberalize and open up the economy ?

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New Industrial Policy
Nationalization of Banks
Green Revolution
Education Policy
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The year 1991 is marked by significant economic reforms in India. The New Industrial Policy of 1991 was the cornerstone of these reforms, which aimed at liberalizing, privatizing, and globalizing the Indian economy. It dismantled the complex ‘License Raj’ system, liberalized foreign trade and investment policies, and reduced the role of the public sector.
The 1991 New Industrial Policy initiated the shift towards a market-oriented economy in India.
Nationalization of Banks occurred primarily in 1969 and 1980. The Green Revolution, related to agricultural reforms, took place from the late 1960s. While education policies are regularly reviewed, the reforms of 1991 were specifically economic in nature.

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13. The Economic Survey of India is published annually by

The Economic Survey of India is published annually by

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Reserve Bank of India
Ministry of Finance
Planning Commission of India
Ministry of Commerce and Industry
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The Economic Survey of India is an annual report presented by the Government of India to the Parliament. It is prepared by the Chief Economic Adviser (CEA) to the Government and published by the Ministry of Finance. It reviews the country’s economic performance over the past year and provides an outlook for the future.
The Economic Survey is the flagship annual document of the Ministry of Finance.
The Reserve Bank of India (RBI) publishes various reports like the Monetary Policy Report and the Report on Currency and Finance. The Planning Commission (now NITI Aayog) previously published documents related to five-year plans and reviews. The Ministry of Commerce and Industry deals with trade and industrial policies but doesn’t publish the Economic Survey.

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14. What is the current status of India’s economy in terms of market class

What is the current status of India’s economy in terms of market classification by the World Bank and the International Monetary Fund?

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Low-income economy
Middle-income economy
High-income economy
Upper-middle-income economy
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India is classified as a middle-income economy by the World Bank.
The World Bank classifies economies based on Gross National Income (GNI) per capita. As of the latest classification (updated July 1, 2023, based on 2022 GNI), India falls into the lower-middle-income group. The broad categories are low-income, middle-income (which includes lower-middle and upper-middle), and high-income economies. Therefore, ‘Middle-income economy’ is the correct broad classification among the given options.
The income classifications by the World Bank are used for analytical purposes and do not imply any specific development stage. The thresholds are updated annually to account for inflation and other factors. The International Monetary Fund (IMF) also uses similar categorizations, often classifying countries as advanced economies, emerging market and developing economies. India is typically included in the latter category, consistent with being a middle-income country by World Bank standards.

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15. Which Government agency is responsible for conducting the ‘Economic Ce

Which Government agency is responsible for conducting the ‘Economic Census’ in India?

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The Reserve Bank of India
The Ministry of Finance
The Ministry of Corporate Affairs
The Ministry of Statistics and Programme Implementation
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The correct option is D) The Ministry of Statistics and Programme Implementation.
The Economic Census in India is a complete count of all establishments located within the geographical boundary of India. It is conducted periodically by the Central Statistical Office (CSO) which is under the Ministry of Statistics and Programme Implementation (MoSPI).
The Economic Census provides disaggregated information on the structure and distribution of economic activities, excluding those in crop production and plantation. The first Economic Census was conducted in 1977. As of 2020, seven such censuses have been conducted, the latest being in 2019-2020.

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16. With reference to physical capital in Indian economy, consider the fol

With reference to physical capital in Indian economy, consider the following pairs :

Items Category
1. Farmer’s plough Working capital
2. Computer Fixed capital
3. Yarn used by the weaver Fixed capital
4. Petrol Working capital

How many of the above pairs are correctly matched ?

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Only one
Only two
Only three
All four
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UPSC IAS – 2024
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The question asks how many pairs are correctly matched. Let’s examine each pair:
1. Farmer’s plough is used repeatedly over many production cycles. This is a tool/machine and is considered Fixed Capital, not Working Capital (which is consumed or transformed in the production process). So, Pair 1 is incorrectly matched.
2. A Computer is a durable asset used in production or work over a long period. This is correctly categorized as Fixed Capital. So, Pair 2 is correctly matched.
3. Yarn is a raw material that is used up or transformed during the weaving process to create fabric. This is correctly categorized as Working Capital, not Fixed Capital. So, Pair 3 is incorrectly matched.
4. Petrol is a fuel that is consumed during production (e.g., running machinery, vehicles). This is correctly categorized as Working Capital, not Fixed Capital. So, Pair 4 is correctly matched.
Only pairs 2 and 4 are correctly matched. Therefore, the number of correctly matched pairs is two. Option B is the correct answer.
Physical capital refers to the tangible assets created by humans for use in the production of goods and services. It is broadly classified into:
– Fixed Capital: Assets that are used repeatedly over a long period in the production process (e.g., machinery, tools, buildings, computers).
– Working Capital: Assets that are consumed or transformed during the production process (e.g., raw materials, fuel, intermediate goods, cash on hand).
The distinction between fixed and working capital is crucial in economics as they play different roles in the production cycle and require different management strategies. Fixed capital represents long-term investments in productive capacity, while working capital ensures the smooth day-to-day operations by providing necessary inputs and liquidity. Human capital, another form of capital, refers to the skills, knowledge, and health of people, which contributes to productivity.

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17. With reference to the sectors of the Indian economy, consider the foll

With reference to the sectors of the Indian economy, consider the following pairs :

Economic activity Sector
1. Storage of agricultural produce Secondary
2. Dairy farm Primary
3. Mineral exploration Tertiary
4. Weaving cloth Secondary

How many of the pairs given above are correctly matched ?

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Only one
Only two
Only three
All four
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UPSC IAS – 2024
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The correct option is B.
Economic activities are typically divided into three main sectors:
– Primary Sector: Extraction and collection of natural resources (Agriculture, forestry, fishing, mining, quarrying).
– Secondary Sector: Processing of raw materials and manufacturing of goods (Industry, construction).
– Tertiary Sector: Provision of services (Trade, transport, storage, communication, banking, insurance, education, healthcare, etc.).

Let’s evaluate the pairs:
1. Storage of agricultural produce: Storage is a service that facilitates the distribution and trade of goods. It falls under the Tertiary sector (warehousing, logistics). The pair (Storage of agricultural produce – Secondary) is incorrectly matched.
2. Dairy farm: Dairy farming involves the production of milk by raising livestock, which is an agricultural activity. Agriculture belongs to the Primary sector. The pair (Dairy farm – Primary) is correctly matched.
3. Mineral exploration: Mineral exploration is the process of searching for mineral deposits. This is part of the broader mining activity, which is classified under the Primary sector as it involves the extraction of natural resources. The pair (Mineral exploration – Tertiary) is incorrectly matched.
4. Weaving cloth: Weaving is a manufacturing process where yarn is converted into fabric. Manufacturing is part of the Secondary sector. The pair (Weaving cloth – Secondary) is correctly matched.

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Therefore, two pairs (2 and 4) are correctly matched.

Beyond the three main sectors, sometimes Quaternary (knowledge-based services like IT, R&D, education, finance) and Quinary (highest-level decision-making) sectors are also identified, but the primary-secondary-tertiary classification is standard.

18. Consider the investments in the following assets: 1. Brand recognition

Consider the investments in the following assets:
1. Brand recognition
2. Inventory
3. Intellectual property
4. Mailing list of clients
How many of the above are considered intangible investments?

Only one
Only two
Only three
All four
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UPSC IAS – 2023
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Investments can be classified as tangible or intangible. Tangible investments are in physical assets that have substance and can be touched, such as land, buildings, machinery, and inventory. Intangible investments are in non-physical assets that derive their value from intellectual or legal rights, brand reputation, relationships, or data.

1. **Brand recognition:** This is the level of consumer awareness and identification of a particular brand. It is a non-physical asset that contributes to a company’s value through reputation and customer loyalty. It is an **intangible** investment.
2. **Inventory:** Inventory consists of raw materials, work-in-progress, and finished goods held by a company. These are physical assets. It is a **tangible** investment.
3. **Intellectual property:** This includes legal rights like patents, copyrights, trademarks, trade secrets, etc. These are non-physical assets that grant exclusive rights to the owner. It is an **intangible** investment.
4. **Mailing list of clients:** This represents valuable data about customers and potential customers. While the list might exist physically or digitally, its value lies in the information and the relationship capital it represents, which is non-physical. It is considered an **intangible** investment (often part of customer-related intangible assets).

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Out of the four options, Brand recognition (1), Intellectual property (3), and Mailing list of clients (4) are considered intangible investments. Inventory (2) is a tangible investment. Therefore, there are three intangible investments listed.

– Intangible investments are in non-physical assets.
– Tangible investments are in physical assets.
– Brand recognition, intellectual property, and client lists are intangible assets.
– Inventory is a tangible asset.
Intangible assets are increasingly important drivers of value for modern businesses. Accounting standards provide guidelines for recognizing and valuing certain intangible assets, such as intellectual property.

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19. Which of the following activities constitute real sector in the econom

Which of the following activities constitute real sector in the economy?

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  • 1. Farmers harvesting their crops
  • 2. Textile mills converting raw cotton into fabrics
  • 3. A commercial bank lending money to a trading company
  • 4. A corporate body issuing Rupee Denominated Bonds overseas

Select the correct answer using the code given below:

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1 and 2 only
2, 3 and 4 only
1, 3 and 4 only
1, 2, 3 and 4
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Option A is correct.
The real sector of the economy is involved in the production, distribution, and consumption of goods and services, while the financial sector deals with financial assets, intermediaries, and transactions. Activities that directly result in the creation or transformation of physical goods are part of the real sector.
1. Farmers harvesting their crops: This is a primary production activity resulting in tangible goods (agricultural output). It falls under the real sector.
2. Textile mills converting raw cotton into fabrics: This is a manufacturing process involving the transformation of raw materials into finished goods. It is part of the real sector.
3. A commercial bank lending money: This is a financial intermediation activity, facilitating the flow of funds. It belongs to the financial sector.
4. A corporate body issuing Rupee Denominated Bonds overseas: This is a fundraising activity involving the creation and issuance of financial instruments. It belongs to the financial sector.
Therefore, only activities 1 and 2 constitute the real sector among the options provided.

20. Consider the following statements: Other things remaining unchanged, m

Consider the following statements:
Other things remaining unchanged, market demand for a good might increase if

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  • price of its substitute increases
  • price of its complement increases
  • the good is an inferior good and income of the consumers increases
  • its price falls

Which of the above statements are correct?

1 and 4 only
2, 3 and 4
1, 3 and 4
1, 2 and 3
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The correct option is A. Market demand for a good might increase if the price of its substitute increases or if its own price falls.
– 1. Price of its substitute increases: If the price of a substitute good (e.g., tea vs. coffee) increases, consumers will switch from the substitute to the original good (coffee), increasing the demand for the original good at every price. This causes a rightward shift in the demand curve. Statement 1 is correct.
– 2. Price of its complement increases: If the price of a complementary good (e.g., cars vs. petrol) increases, the total cost of consuming the bundle increases. This typically leads to a decrease in demand for both the complement and the original good (cars). This causes a leftward shift in the demand curve. Statement 2 is incorrect.
– 3. The good is an inferior good and income of the consumers increases: For an inferior good (e.g., cheap noodles), as consumer income increases, demand for that good decreases (consumers switch to normal goods). This causes a leftward shift in the demand curve. Statement 3 is incorrect.
– 4. Its price falls: According to the law of demand, if the price of a good falls, the quantity demanded increases. While this is technically a movement *along* the demand curve (not a shift of the curve which is typically meant by “increase in market demand”), in the context of competitive multiple-choice questions, “market demand… increase” is sometimes used more broadly to include factors that lead to more of the good being bought, which includes a price reduction. Given the options, this interpretation is likely intended. Statement 4 leads to an increase in the quantity demanded.
Factors causing a rightward shift in the demand curve (increase in demand) include increased price of substitutes, decreased price of complements, increase in consumer income (for normal goods), decrease in consumer income (for inferior goods), change in tastes favouring the good, increase in population, expectations of future price increases. A fall in the good’s own price increases the quantity demanded, representing a movement along the existing demand curve. However, option A which includes 1 and 4 is the only combination where both factors lead to more of the good being demanded/bought.

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