Nature of Indian Economy Archives

21. Which one of the following is not a sub-index of the World Bank’s Ease

Which one of the following is not a sub-index of the World Bank’s Ease of Doing Business Index?

Maintenance of law and order

Paying taxes

Registering property

Dealing with construction permits

This question was previously asked in

UPSC IAS – 2019

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The correct answer is A, as ‘Maintenance of law and order’ is not a sub-index of the World Bank’s Ease of Doing Business Index.

The World Bank’s Ease of Doing Business index measures aspects of business regulation that are relevant to a domestic firm throughout its life cycle. It assesses factors such as starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.
Statements B, C, and D refer to ‘Paying taxes’, ‘Registering property’, and ‘Dealing with construction permits’, respectively, all of which are explicit sub-indices used in the calculation of the Ease of Doing Business ranking.
‘Maintenance of law and order’, while crucial for a business environment, is a broader governance aspect and is not a specific, measured indicator within the defined scope of the Ease of Doing Business report.

The Ease of Doing Business report was published annually by the World Bank Group from 2003 to 2020. In 2021, the World Bank Group discontinued the report due to concerns about data integrity. While the report is no longer published, the components tested in this question were standard features of the index during its publication period.

22. Consider the following statements : 1. Petroleum and Natural Gas Reg

Consider the following statements :

1. Petroleum and Natural Gas Regulatory Board (PNGRB) is the first regulatory body set up by the Government of India.
2. One of the tasks of PNGRB is to ensure competitive markets for gas.
3. Appeals against the decisions of PNGRB go before the Appellate Tribunals for Electricity.

Which of the statements given above are correct?

1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

This question was previously asked in

UPSC IAS – 2019

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Statement 1: The Petroleum and Natural Gas Regulatory Board (PNGRB) was established under the PNGRB Act, 2006. It was not the first regulatory body in India. Several regulatory bodies were established much earlier, such as SEBI (1988/1992), TRAI (1997), and CERC (1998). Thus, Statement 1 is incorrect.
Statement 2: The PNGRB Act, 2006, lists the functions of the Board, which include protecting the interests of consumers and entities, ensuring the adequate availability of petroleum products, fostering fair trade, and promoting competitive markets. Section 11(h) explicitly states one of the functions is “promoting competitive markets in petroleum, petroleum products and natural gas.” Thus, Statement 2 is correct.
Statement 3: The PNGRB Act, 2006, provides for appeals against the orders of the PNGRB to be filed before the Appellate Tribunal for Electricity (APTEL). APTEL was established under the Electricity Act, 2003, to hear appeals against the orders of regulatory commissions, and its jurisdiction was extended to cover appeals against PNGRB decisions as per the PNGRB Act. Thus, Statement 3 is correct.
Based on the analysis, Statements 2 and 3 are correct.

The PNGRB is a regulatory body established in 2006 to promote competitive markets in the petroleum and natural gas sector, and appeals against its decisions go to the Appellate Tribunal for Electricity (APTEL). It is not the first regulatory body in India.

The establishment of PNGRB aimed to regulate the midstream and downstream activities in the petroleum and natural gas sector, which were previously largely unregulated or governed by administrative orders. Its functions include regulating the refining, processing, storage, transportation, distribution, marketing and sale of petroleum, petroleum products, and natural gas.

23. In a given year in India, official poverty lines are higher in some St

In a given year in India, official poverty lines are higher in some States than in others because

poverty rates vary from State to State

price levels vary from State to State

Gross State Product varies from State to State

quality of public distribution varies from State to State

This question was previously asked in

UPSC IAS – 2019

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Option B is correct. Official poverty lines in India are estimated for different states because the cost of living, reflected in price levels for essential goods and services, varies from state to state. To achieve the same level of consumption (and thus define a similar poverty threshold in real terms), the required monetary expenditure needs to be adjusted for these state-specific price differences.

– Poverty lines in India are based on consumption expenditure.
– The cost of the basket of goods and services included in the poverty line calculation varies across states due to differences in price levels.
– Therefore, poverty lines are calculated separately for different states using state-specific price indices to account for these variations.

– While poverty rates (Option A), Gross State Product (Option C), and quality of public distribution (Option D) vary across states, these are not the *reason* why the poverty lines themselves are calculated at different monetary values. The lines are different *because* the cost of living (price levels) is different.

24. The Global Competitiveness Report is published by the

The Global Competitiveness Report is published by the

International Monetary Fund

United Nations Conference on Trade and Development

World Economic Forum

World Bank

This question was previously asked in

UPSC IAS – 2019

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The Global Competitiveness Report is published by the World Economic Forum.

The World Economic Forum (WEF) is an international non-governmental and lobbying organization based in Cologny, Geneva, Switzerland. It is known for its annual meeting in Davos. The Global Competitiveness Report is one of its major publications, assessing the factors driving the productivity and prosperity of countries.

Other organizations mentioned publish different key reports: The International Monetary Fund (IMF) publishes the World Economic Outlook and Global Financial Stability Report. The United Nations Conference on Trade and Development (UNCTAD) publishes the Trade and Development Report and World Investment Report. The World Bank publishes the World Development Report and Doing Business report (though the latter was discontinued).

25. Despite being a high saving economy, capital formation may not result

Despite being a high saving economy, capital formation may not result in significant increase in output due to

weak administrative machinery

illiteracy

high population density

high capital-output ratio

This question was previously asked in

UPSC IAS – 2018

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The correct answer is D) high capital-output ratio.

The capital-output ratio (COR) is an economic metric that describes the relationship between the amount of capital invested in an economy and the amount of output it produces. A high COR indicates that a large amount of capital is required to produce a given increase in output.

In a high-saving economy, a significant portion of national income is saved and potentially converted into investment (capital formation). However, if the economy suffers from a high capital-output ratio, the efficiency of converting this capital investment into actual output growth is low. This can happen due to various reasons like inefficient investment allocation, long gestation periods of projects, poor infrastructure, technological backwardness, or structural rigidities, all of which make each unit of capital less productive in generating output. Therefore, high savings and capital formation might not translate into a proportionally high increase in output if the capital-output ratio is high.

26. Which of the following has/have occurred in India after its liberaliza

Which of the following has/have occurred in India after its liberalization of economic policies in 1991?

Share of agriculture in GDP increased enormously.
Share of India’s exports in world trade increased.
FDI flows increased.
India’s foreign exchange reserves increased enormously.

Select the correct answer using the codes given below:

1 and 4 only

2, 3 and 4 only

2 and 3 only

1, 2, 3 and 4

This question was previously asked in

UPSC IAS – 2017

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The correct answer is B) 2, 3 and 4 only. After the liberalization of economic policies in 1991, India experienced significant increases in its share of world trade, FDI flows, and foreign exchange reserves, while the share of agriculture in GDP declined.

– Statement 1 is incorrect. The share of agriculture in India’s GDP has consistently declined after 1991, although a large proportion of the population still depends on it for livelihood. This is a common structural transformation in developing economies.
– Statement 2 is correct. Liberalization led to increased trade integration with the global economy, resulting in a rise in India’s share of global exports.
– Statement 3 is correct. Policy changes opened up the Indian economy to foreign investment, leading to a substantial increase in Foreign Direct Investment (FDI) inflows.
– Statement 4 is correct. Increased trade surplus (in some periods), capital inflows (FDI, FII, external commercial borrowings), and remittances led to a massive increase in India’s foreign exchange reserves.

The 1991 reforms were aimed at dismantling the ‘License Raj’, opening the economy to greater domestic and international competition, and integrating it with the global economy. These reforms led to higher economic growth rates, increased trade, and greater foreign investment, fundamentally transforming the Indian economy.

27. India’s ranking in the ‘Ease of Doing Business Index’ is sometimes see

India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking?

Organization for Economic Cooperation and Development (OECD)

World Economic Forum

World Bank

World Trade Organization (WTO)

This question was previously asked in

UPSC IAS – 2016

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The ‘Ease of Doing Business Index’ is a widely recognized index that ranks countries based on how conducive their regulatory environment is to the starting and operation of a local firm.

This index was published annually by the World Bank Group. It measured aspects such as starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

The World Bank discontinued the ‘Doing Business’ report series (which included the Ease of Doing Business Index) in September 2021 following allegations of data irregularities. However, during its publication period, the World Bank was the sole authority for this ranking.

28. Which of the following has/have been accorded ‘Geographical Indication

Which of the following has/have been accorded ‘Geographical Indication’ status?

1. Banaras Brocades and Sarees
2. Rajasthani Daal-Bati-Churma
3. Tirupathi Laddu

Select the correct answer using the code given below.

1 only

2 and 3 only

1 and 3 only

1, 2 and 3

This question was previously asked in

UPSC IAS – 2015

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Banaras Brocades and Sarees (1) and Tirupathi Laddu (3) have been accorded Geographical Indication (GI) status.

A Geographical Indication (GI) is a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin.

Banaras Brocades and Sarees are famous traditional textiles from the Varanasi region. Tirupathi Laddu is a famous sweet Prasad from the Venkateswara Temple in Tirumala, Tirupathi. Both have received GI tags acknowledging their unique geographical origin and associated traditional craftsmanship or reputation. Rajasthani Daal-Bati-Churma is a popular culinary dish from Rajasthan but does not have a GI tag, as GI status is generally not granted to generic culinary preparations unless they have a very specific unique characteristic tied to the geography (like Darjeeling Tea leaves).

29. With reference to inflation in India, which of the following statement

With reference to inflation in India, which of the following statements is correct?

Controlling the inflation in India is the responsibility of the Government of India only

The Reserve Bank of India has no role in controlling the inflation

Decreased money circulation helps in controlling the inflation

Increased money circulation helps in controlling the inflation

This question was previously asked in

UPSC IAS – 2015

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The correct option is C (Decreased money circulation helps in controlling the inflation).

– Inflation is generally caused by excessive demand or reduced supply, often fuelled by an increase in the money supply beyond the growth of output.
– Controlling inflation is a joint responsibility of the government and the central bank (RBI). The RBI is statutorily mandated to maintain price stability, often through monetary policy. Therefore, A and B are incorrect.
– Monetary policy tools aimed at controlling inflation typically involve reducing the money supply and credit availability or increasing interest rates, which leads to decreased money circulation (tight monetary policy). This curbs aggregate demand, helping to cool down inflationary pressures.
– Increased money circulation (loose or expansionary monetary policy) typically stimulates demand and can exacerbate inflation. Therefore, D is incorrect.

The Government sets an inflation target for the RBI (currently 4% with a band of +/- 2%). The RBI uses various instruments like Repo rate, Reverse Repo rate, CRR, SLR, and OMOs to manage liquidity and influence inflation. Fiscal measures like controlling government expenditure, taxation, and managing supply-side issues also play a role in controlling inflation.

30. Which of the following organizations brings out the publication known

Which of the following organizations brings out the publication known as ‘World Economic Outlook’?

The International Monetary Fund

The United Nations Development Programme

The World Economic Forum

The World Bank

This question was previously asked in

UPSC IAS – 2014

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The International Monetary Fund (IMF) is the organization that publishes the ‘World Economic Outlook’ report.

The World Economic Outlook (WEO) is a comprehensive report published by the IMF typically twice a year, in spring and fall. It presents the IMF staff’s analysis and projections of global economic developments and trends. It provides analysis of global output, inflation, trade, and other macroeconomic indicators.

The World Bank publishes reports like the ‘Global Economic Prospects’. The World Economic Forum is known for reports such as ‘The Global Competitiveness Report’. The United Nations Development Programme (UNDP) publishes the ‘Human Development Report’.