Nature of Indian Economy Archives

51. Which one among the following sectors in India has the highest share o

Which one among the following sectors in India has the highest share of employment?

Agriculture and allied activities

Manufacturing

Construction

Tertiary sector

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UPSC CAPF – 2013

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The correct option is A.

– As of the period this question likely pertains to (early 2010s), Agriculture and allied activities continued to be the largest employer in India, despite its declining share in the Gross Domestic Product (GDP).

While the Tertiary (services) sector’s contribution to India’s GDP is the highest and has been growing rapidly, the Agriculture sector still provides employment to the largest proportion of the workforce, particularly in rural areas. Manufacturing and Construction sectors employ significant numbers but their share was less than that of Agriculture. The trend is towards a shift in employment share away from agriculture towards services and manufacturing/construction, but agriculture remained the dominant employer in the early 2010s.

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52. Consider the following statements : 1. Employment growth in India in

Consider the following statements :

1. Employment growth in India in the second half of the first decade of 21st century was relatively modest.
2. There was lower labour force participation rate across all ages during the period.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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UPSC CAPF – 2013

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The correct option is C, as both statements are correct.

– Statement 1 is correct. Economic data from the period 2004-05 to 2009-10 indicated a phenomenon often termed ‘jobless growth’, where GDP grew significantly but employment growth was sluggish and relatively modest compared to the previous periods.
– Statement 2 is also correct. During this period, there was a noticeable decline in the Labour Force Participation Rate (LFPR) across various age groups, including youth and women, particularly in rural areas. This contributed to the modest employment growth despite economic expansion.

The National Sample Survey Office (NSSO) surveys on employment and unemployment provide the basis for these observations. The period 2004-05 to 2009-10 showed a deceleration in employment growth compared to 1999-2000 to 2004-05. The decline in LFPR, especially among rural women, was a significant trend observed during this time.

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53. Privatization includes

Privatization includes

sale of public enterprises to private sector

disinvestment of public enterprise equity

participation of private sector in management in public sector enterprises

All of the above

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UPSC CAPF – 2013

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The correct option is D.

– Privatization is the process of transferring ownership or control of a public sector enterprise, asset, or service to the private sector.
– Statement A, “sale of public enterprises to private sector,” is a direct form of privatization where the government sells the entire enterprise or a majority stake to private owners.
– Statement B, “disinvestment of public enterprise equity,” refers to the government selling a portion of its shares in a public sector undertaking (PSU) to the private sector or the public. While the government may retain majority control in some disinvestment cases, it is still considered a step towards privatization or marketization by reducing state ownership.
– Statement C, “participation of private sector in management in public sector enterprises,” includes arrangements like management contracts, leases, or joint ventures where the private sector takes significant managerial control, even if full ownership is not transferred. This is also a form of privatization as it reduces direct government management.
– Since all three statements describe different facets or forms of privatization, “All of the above” is the correct answer.

Privatization can be pursued for various reasons, including improving efficiency, reducing the fiscal burden on the government, raising revenue, and promoting competition. The methods vary from complete sale (strategic sale) to minority stake sales (disinvestment) and involving private players in management or service delivery.

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54. The rate of inflation in India is measured generally in respect of mov

The rate of inflation in India is measured generally in respect of movement of

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consumer price index

wholesale price index

cost of living index for agricultural labour

money supply

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UPSC CAPF – 2013

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The correct option is A.

– Inflation in India is measured using several price indices, primarily the Wholesale Price Index (WPI) and the Consumer Price Index (CPI).
– The Wholesale Price Index (WPI) measures price changes at the wholesale level. It was historically the headline inflation measure.
– The Consumer Price Index (CPI) measures price changes at the retail level for a basket of goods and services consumed by households. CPI is considered a better indicator of the cost of living for consumers.
– Since 2014, the Reserve Bank of India (RBI) has adopted CPI (Combined) as the key measure of inflation for monetary policy decisions. Therefore, CPI is now generally considered the headline rate of inflation impacting the general public and policy.
– Cost of living index for agricultural labour (C) is a very specific index, not a general measure of overall inflation.
– Money supply (D) is a factor influencing inflation but not a measure of the rate of inflation itself.

There are different series of CPI, including CPI for Industrial Workers (CPI-IW), Agricultural Labourers (CPI-AL), Rural Labourers (CPI-RL), and the urban, rural, and combined CPI (CPI-U, CPI-R, CPI-C). CPI-C is the series used by RBI and commonly referred to as the headline retail inflation rate.

55. Which one among the following items has maximum weight in wholesale pr

Which one among the following items has maximum weight in wholesale price index in India?

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Primary article

Fuel and power

Manufactured product

Food item

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UPSC CAPF – 2013

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The correct answer is C) Manufactured product. This item group holds the maximum weight in the current Wholesale Price Index (WPI) series in India.

– The Wholesale Price Index (WPI) in India is a key inflation indicator. It is calculated based on changes in the average price of a basket of goods at the wholesale level.
– The WPI basket is divided into three major groups: Primary Articles, Fuel and Power, and Manufactured Products.
– As per the current WPI series with the base year 2011-12, the approximate weights of these groups are:
– Primary Articles: 22.6%
– Fuel and Power: 13.2%
– Manufactured Products: 64.2%
– Clearly, Manufactured Products have the highest weight among the three main groups.
– “Food item” is not a major group itself but a category that appears within both Primary Articles (e.g., food grains, fruits, vegetables) and Manufactured Products (e.g., processed food products). Therefore, comparing a sub-category like “Food item” directly with main groups is not appropriate based on the standard WPI structure.

The WPI measures inflation at the producer level (wholesale), while the Consumer Price Index (CPI) measures inflation at the consumer level (retail). For monetary policy decisions, the Reserve Bank of India primarily uses the CPI, though WPI is also monitored for understanding cost-push factors and supply-side pressures.

56. Which of the following statements related to globalization is/are corr

Which of the following statements related to globalization is/are correct?

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1. It has resulted in the change of scale in economic activities.
2. End of Cold War facilitated globalization.
3. Flow of money in transnational corporations is discouraged.

Select the correct answer using the code given below.

1 and 2 only

1 only

2 and 3 only

1, 2 and 3

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UPSC CAPF – 2013

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A) 1 and 2 only

Let’s evaluate each statement related to globalization:
1. Globalization involves the increasing interconnectedness and integration of economies worldwide. This leads to a shift in the scale of economic activities, with production chains becoming global, markets expanding internationally, and businesses operating across borders. This statement is correct.
2. The end of the Cold War marked a significant geopolitical shift, leading to the opening of economies in former communist states, reduced political barriers to trade and investment, and increased international cooperation. This significantly facilitated the expansion and deepening of globalization. This statement is correct.
3. Transnational corporations (TNCs) are major agents of globalization. Their operations involve significant cross-border flows of capital, including foreign direct investment, loans, portfolio investment, and repatriation of profits. Far from being discouraged, the increased flow of money across national borders facilitated by TNCs and financial markets is a defining feature of globalization. This statement is incorrect.
Based on the analysis, statements 1 and 2 are correct, while statement 3 is incorrect.

Globalization encompasses economic, political, social, and cultural aspects. While it offers opportunities like increased trade, economic growth, and cultural exchange, it also presents challenges such as increased inequality, exploitation of labor, environmental degradation, and cultural homogenization.

57. In which of the following types of economy are the factors of producti

In which of the following types of economy are the factors of production owned individually ?

Capitalist

Socialist

Mixed

Both socialist and capitalist

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UPSC CAPF – 2011

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In a Capitalist economy, the factors of production are owned individually.

Capitalism is an economic system characterized by private ownership of the means of production (factors of production like land, labour, capital, and entrepreneurship) and their operation for profit.

In contrast, socialist economies typically involve state or collective ownership of the factors of production, while mixed economies combine elements of both private and public ownership and control.

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58. Consider the following items of wholesale price index : 1. Primary

Consider the following items of wholesale price index :

1. Primary articles
2. Fuel, power, lights and lubricants
3. Manufacturing products

Arrange the above items in descending order in terms of their weightage in calculating wholesale price index :

1, 2, 3

1, 3, 2

3, 1, 2

3, 2, 1

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UPSC CAPF – 2010

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Arranging the items in descending order of their weightage in calculating the Wholesale Price Index (WPI) gives: Manufacturing products, Primary articles, Fuel, power, lights and lubricants.

The Wholesale Price Index (WPI) in India is calculated based on the weighted average of prices of a basket of commodities. The commodities are classified into three major groups with different weightages reflecting their relative importance in wholesale trade. As per the current series (Base Year 2011-12), the weightages are approximately: Manufactured Products (64.23%), Primary Articles (22.62%), and Fuel & Power (13.15%). While the exact percentages may vary slightly with base year revisions, the descending order of weightage consistently remains Manufacturing > Primary > Fuel & Power.

WPI measures the average change in the prices of commodities at the wholesale level. It is primarily used as a macroeconomic indicator for monitoring inflation, formulating trade and fiscal policies, and in business decisions like price negotiation and escalation clauses. The base year for WPI is revised periodically to reflect changes in the structure of the economy.

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59. Which one of the following is not a feature of agriculture in India

Which one of the following is not a feature of agriculture in India ?

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Subsistence agriculture

Pressure of population on agriculture

Dependence upon Monsoon

Predominance of cash crops

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UPSC NDA-2 – 2021

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While cash crops are grown in India and their importance is growing, the overall characteristic of Indian agriculture is not the ‘predominance of cash crops’. Food grain production (like rice and wheat) for domestic consumption still dominates the agricultural landscape due to the large population.

Indian agriculture is largely characterized by subsistence farming, high population pressure, and heavy dependence on monsoon.

Features of Indian agriculture include small and fragmented landholdings, reliance on traditional methods in many areas, varied cropping patterns based on regional conditions, and issues like disguised unemployment. While commercial farming is increasing, particularly for certain crops and in certain regions, it does not represent the *predominance* of the sector across the country.

60. Certain geographical regions in a country may have economic laws diffe

Certain geographical regions in a country may have economic laws different from the country’s typical economic laws. Which one of the following could be the reason for allowing the differences in economic laws for particular geographical regions?

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Increasing trade in the country

Discretionary allocation of natural resources

Increasing foreign investment

Leverage connections to extract a larger share of existing wealth

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UPSC Geoscientist – 2021

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Certain geographical regions may have economic laws different from the country’s typical laws primarily to attract foreign investment and boost economic activity, such as in the case of Special Economic Zones (SEZs). These regions offer incentives like tax breaks, relaxed regulations, and simplified procedures specifically to create a favorable environment for investors.

Special Economic Zones (SEZs) are examples of such regions, established with distinct economic regulations to promote exports, generate employment, and attract domestic and foreign investment. The differential laws are designed to make the region globally competitive for business and investment.

While increasing trade (especially exports) is a major objective and outcome of establishing such regions, attracting investment (both domestic and foreign) is the primary driver for creating a distinct legal and regulatory framework, as investment is the engine for economic activity and subsequent trade growth. Discretionary allocation of natural resources or leveraging connections for personal gain are not the stated or legitimate reasons for establishing such zones.