Answer: (D) None of the above

Explanation

A vehicle currency is a widely accepted currency used as an intermediary in international trade and foreign exchange transactions between two other currencies. The US Dollar (USD) is the world’s principal vehicle currency because it is the most widely used currency for global trade, reserves, and foreign exchange markets. Since the US Dollar is not among the given options, the correct answer is (D) None of the above.

Exam Facts

• Vehicle Currency: A currency used as an intermediary for exchanging two other currencies.
• US Dollar (USD) is the world’s leading vehicle currency in international trade and forex markets.
• A large share of global foreign exchange transactions involves the US Dollar.
• The Euro (EUR) is the second-most important international and reserve currency.
• The Japanese Yen (JPY) is a major international currency but is not the primary vehicle currency.
• The Pound Sterling (GBP) was the dominant international currency before the rise of the US Dollar after World War II.
• Foreign exchange (Forex) market is the world’s largest financial market, where vehicle currencies reduce transaction costs.

Answer: (C) Depreciation

Explanation

Gross Domestic Product (GDP) is the total market value of all final goods and services produced within a country’s domestic territory during a financial year. Net Domestic Product (NDP) is obtained by subtracting depreciation (consumption of fixed capital) from GDP. Depreciation represents the wear and tear of machinery, buildings, and other fixed assets used in production.

Formula:
NDP = GDP − Depreciation (Consumption of Fixed Capital)

Exam Facts

• GDP (Gross Domestic Product): Total value of final goods and services produced within the domestic territory of a country.
• NDP (Net Domestic Product): GDP minus Depreciation (Consumption of Fixed Capital).
• Depreciation refers to the reduction in the value of fixed assets due to wear and tear, obsolescence, or accidental damage.
• GNP (Gross National Product) = GDP + Net Factor Income from Abroad (NFIA).
• NNP (Net National Product) = GNP − Depreciation.
• GDP at Market Price (GDPMP) = GDP at Factor Cost (GDPFC) + Net Indirect Taxes (NIT).
• Net Indirect Tax (NIT) = Indirect Taxes − Subsidies.
• National income in India is estimated by the National Statistical Office under the Ministry of Statistics and Programme Implementation (MoSPI).

Answer: (B) General Insurance

Explanation

General insurance provides financial protection against the loss or damage of property, assets, and wealth caused by events such as fire, theft, accidents, or natural disasters. Unlike life insurance, it does not insure human life but compensates for financial losses arising from damage to property or liabilities.

Exam Facts

• General Insurance covers risks related to property, vehicles, health, travel, fire, marine, and liability.
• Life Insurance provides financial protection against the risk of death or survival of the insured person.
• Crop Insurance is a type of general insurance that protects farmers against crop loss due to natural calamities, pests, and diseases.
• Social Insurance includes government-backed schemes providing protection against old age, disability, sickness, unemployment, and maternity.
• The Insurance Regulatory and Development Authority of India (IRDAI) is the statutory regulator of the insurance sector in India.
• IRDAI was established under the Insurance Regulatory and Development Authority Act, 1999.
• The Life Insurance Corporation of India (LIC) was established in 1956 through the Life Insurance Corporation Act, 1956.
• The general insurance business in India was nationalized in 1972 through the General Insurance Business (Nationalisation) Act, 1972, leading to the formation of the General Insurance Corporation (GIC).

Answer: (B) High taxation

Explanation

The unorganized (informal) sector is characterized by low productivity, low wages, lack of job security, and limited access to modern technology. Most enterprises in this sector operate outside the formal tax net or have minimal tax compliance. Therefore, high taxation is not considered a major problem of the unorganized sector.

Exam Facts

• The unorganized (informal) sector consists of enterprises that are generally small, unregistered, and not regulated by the government.
• Workers in this sector usually lack written contracts, social security benefits, paid leave, and job security.
• Common problems include low productivity, low wages, poor working conditions, and outdated technology.
• The organized sector consists of enterprises registered with the government and governed by labour and tax laws.
• The Periodic Labour Force Survey (PLFS) is conducted by the National Statistical Office (NSO) to collect employment and unemployment data in India.
• The Code on Social Security, 2020 aims to extend social security benefits to workers in both the organized and unorganized sectors.
• The e-Shram Portal, launched in 2021 by the Ministry of Labour & Employment, creates a national database of unorganized workers.
• Questions on the organized vs. unorganized sector, informal employment, and labour codes are frequently asked in WBCS, UPSC, SSC, and other State PSC examinations.

Answer: (A) Deflation

Explanation

Deflation is a persistent decline in the general price level of goods and services over a period of time. It increases the purchasing power of money but may reduce consumption, investment, production, and employment. Deflation is generally associated with weak demand and economic slowdown.

Exam Facts

• Deflation: Persistent fall in the general price level; inflation rate becomes negative.
• Disinflation: A decline in the rate of inflation, where prices continue to rise but at a slower pace.
• Stagflation: A situation of high inflation, high unemployment, and slow economic growth occurring simultaneously.
• Depression: A severe and prolonged economic downturn marked by a sharp decline in GDP, employment, investment, and income.
• The Consumer Price Index (CPI) is the primary measure of retail inflation in India; it is compiled by the National Statistical Office (NSO).
• The Wholesale Price Index (WPI) measures inflation at the wholesale level and is released by the Office of the Economic Adviser, Ministry of Commerce & Industry.
• The Reserve Bank of India (RBI) aims to maintain CPI inflation at 4% ± 2% under the Flexible Inflation Targeting framework.

Answer: (A) Customs Duties

Explanation

Customs Duty is a tax levied by the government on the import and export of goods. In India, customs duties are primarily imposed on imports to generate revenue, regulate foreign trade, and protect domestic industries. The levy and collection of customs duties are governed by the Customs Act, 1962.

Exam Facts

• Customs Duty is levied on the import and export of goods, though export duties are imposed only on selected items.
• The Customs Act, 1962 is the principal law governing customs administration in India.
• Customs duties are collected by the Central Board of Indirect Taxes and Customs (CBIC) under the Ministry of Finance.
• Basic Customs Duty (BCD) is the primary duty imposed on imported goods.
• Excise Duty was levied on the manufacture of goods in India but has largely been subsumed under GST (except on products like petroleum and tobacco).
• VAT (Value Added Tax) has been replaced by GST for most goods and services, though some petroleum products and alcoholic liquor for human consumption remain outside the GST regime.
• Goods and Services Tax (GST) was introduced on 1 July 2017 through the 101st Constitutional Amendment Act, 2016.
• Article 265 of the Constitution states that no tax shall be levied or collected except by authority of law.

Answer: (D) Construction

Explanation

The secondary sector includes activities that transform raw materials into finished or semi-finished goods and also includes construction. Trade, transport, and communication are service activities and therefore belong to the tertiary sector. Hence, construction is the correct answer.

Exam Facts

• The Primary Sector includes activities such as agriculture, forestry, fishing, mining, and animal husbandry.
• The Secondary Sector includes manufacturing, construction, electricity, gas, and water supply.
• The Tertiary Sector (service sector) includes trade, transport, communication, banking, insurance, tourism, education, and healthcare.
• The Construction industry plays a major role in employment generation and infrastructure development.
• India follows the National Industrial Classification (NIC) for classifying economic activities.
• Gross Value Added (GVA) measures the contribution of different sectors to the economy and is published by the National Statistical Office (NSO).
• The service sector contributes the largest share to India’s Gross Value Added (GVA) and Gross Domestic Product (GDP).

Answer: (D) Increase in money supply

Explanation

Anti-inflationary measures aim to reduce excessive demand and stabilize prices. Increasing the money supply raises liquidity in the economy, which can increase aggregate demand and further fuel inflation. Therefore, increase in money supply is not an anti-inflationary measure.

Exam Facts

• Inflation is a sustained increase in the general price level of goods and services.
• The Reserve Bank of India (RBI) controls inflation mainly through monetary policy by adjusting the Repo Rate, Cash Reserve Ratio (CRR), and Statutory Liquidity Ratio (SLR).
• Anti-inflationary fiscal measures include higher taxes, reduced government expenditure, and curbing disposable income.
• Checking black marketing and hoarding helps improve the supply of essential commodities and reduces artificial price rises.
• Tax reforms can help control inflation by improving tax efficiency, discouraging speculative activities, and increasing government revenue without excessive borrowing.
• Expansionary monetary policy (e.g., increasing money supply or reducing interest rates) is generally used to tackle recession, not inflation.
• The Monetary Policy Committee (MPC), constituted under the Reserve Bank of India Act, 1934 (amended in 2016), decides the policy repo rate.
• India follows a Flexible Inflation Targeting (FIT) framework, with the RBI targeting 4% CPI inflation with a tolerance band of ±2% (2%–6%).

Answer: (C) 1966–1969

Explanation

The period 1966–1969 is known as the Plan Holiday because no regular Five-Year Plan was implemented during these three years. Instead, the government introduced three Annual Plans due to economic difficulties caused by the 1962 Sino-Indian War, 1965 Indo-Pak War, severe droughts, and financial instability. The Fourth Five-Year Plan began in 1969.

Exam Facts

• Plan Holiday: 1966–1969, during which Three Annual Plans (1966–67, 1967–68, and 1968–69) were implemented.
• The Third Five-Year Plan (1961–1966) emphasized self-reliance and agriculture but failed due to wars and drought.
• Major reasons for the Plan Holiday:
  • 1962 Sino-Indian War
  • 1965 Indo-Pak War
  • Severe droughts (1965–66)
  • Food shortage and inflation
• The Fourth Five-Year Plan was implemented during 1969–1974 with the objective of growth with stability and self-reliance.
• The Planning Commission was established on 15 March 1950 under the chairmanship of the Prime Minister.
• The First Five-Year Plan covered 1951–1956 and focused mainly on agriculture and irrigation.
• The Planning Commission was replaced by NITI Aayog on 1 January 2015.

Answer: (B) Textile

Explanation

A Sunrise Sector is a rapidly growing industry with high potential for future expansion, employment, and investment. Artificial Intelligence (AI), Information Technology (IT), Space Technology, and Food Processing are considered sunrise sectors due to technological innovation and strong growth prospects. The textile industry is a traditional or mature industry and is not classified as a sunrise sector.

Exam Facts

• Sunrise Sector: A fast-growing industry with high potential for future growth, innovation, and employment.
• Examples of sunrise sectors in India include Artificial Intelligence (AI), Information Technology (IT), Biotechnology, Renewable Energy, Space Technology, Food Processing, Electric Vehicles (EVs), and FinTech.
• Textiles is one of India’s traditional industries and is often referred to as a sunset/mature industry in the context of sunrise-sector classification.
• The Ministry of Food Processing Industries (MoFPI) promotes growth of the food processing sector through schemes such as PM Kisan SAMPADA Yojana.
• The IndiaAI Mission, approved in 2024, aims to strengthen India’s AI ecosystem through computing infrastructure, innovation, and skill development.
• The Indian Space Research Organisation (ISRO), established in 1969, is the nodal agency for India’s space programme.
• The Indian National Space Promotion and Authorization Center (IN-SPACe), established in 2020, promotes private sector participation in the space sector.

Answer: (D) Apex financial institution of industrial credit

Explanation

NABARD (National Bank for Agriculture and Rural Development) is the apex development financial institution for agriculture and rural development in India. It promotes integrated rural development and provides refinance and financial assistance to rural financial institutions. Industrial credit is not its primary function; this role was mainly performed by institutions such as the Industrial Development Bank of India (IDBI).

Exam Facts

• NABARD stands for National Bank for Agriculture and Rural Development.
• NABARD was established on 12 July 1982 on the recommendation of the B. Sivaraman Committee.
• It was established under the National Bank for Agriculture and Rural Development Act, 1981.
• NABARD is the apex development financial institution for agriculture and rural development in India.
• It provides refinance to cooperative banks, Regional Rural Banks (RRBs), and other eligible rural financial institutions.
• NABARD provides long-term loans to State Governments for contributing to the share capital of cooperative credit institutions.
• NABARD promotes Self-Help Groups (SHGs) through the SHG–Bank Linkage Programme, one of the world’s largest microfinance initiatives.
• IDBI was established in 1964 as the apex financial institution for industrial finance, while SIDBI (established in 1990) focuses on financing and promoting MSMEs.

Answer: (B) There is co-existence of public sector and private sector.

Explanation

A mixed economy is an economic system in which both the public sector and the private sector operate simultaneously. The government regulates and participates in key sectors, while private enterprises function based on market principles. India has followed a mixed economy model since Independence.

Exam Facts

• Mixed Economy: An economic system where public and private sectors coexist and complement each other.
• India adopted the mixed economy model after Independence, with the Industrial Policy Resolution, 1948 laying its foundation.
• The Industrial Policy Resolution, 1956 assigned a dominant role to the public sector in strategic and basic industries.
• After the New Economic Policy (Liberalisation, Privatisation, and Globalisation – LPG) of 1991, the role of the private sector expanded significantly.
• Capitalist Economy: Means of production are mainly owned by private individuals, with limited government intervention.
• Socialist Economy: Means of production are primarily owned and controlled by the State.
• NITI Aayog, established on 1 January 2015, replaced the Planning Commission and promotes cooperative and competitive federalism rather than centralized planning.

Answer: (B) Price Index

Explanation

The Human Development Index (HDI) is a composite index that measures a country’s level of human development based on health, education, and income. It does not include the Price Index as one of its components. Therefore, Price Index is the correct answer.

Exam Facts

• Human Development Index (HDI) was introduced by the United Nations Development Programme (UNDP) in 1990.
• The concept of HDI was developed by Mahbub ul Haq, with significant contributions from Amartya Sen.
• HDI measures three dimensions of human development:
  • Health Index – measured by Life Expectancy at Birth.
  • Education Index – based on Mean Years of Schooling and Expected Years of Schooling.
  • Income Index – measured using Gross National Income (GNI) per capita (PPP US$).
• HDI values range from 0 to 1, with a higher value indicating higher human development.
• HDI is published annually in the Human Development Report (HDR) by the UNDP.
• Price Index (such as CPI or WPI) is used to measure inflation, not human development.
• Other important UNDP indices include the Gender Inequality Index (GII) and the Multidimensional Poverty Index (MPI).

Answer: (C) Ratio of Non-working Age Population to Working Age Population.

Explanation

The Dependency Ratio measures the proportion of the non-working-age population (generally 0–14 years and 65 years & above) relative to the working-age population (15–64 years). It indicates the economic burden on the working population to support dependents. A higher dependency ratio implies greater pressure on the productive workforce.

Exam Facts

• Dependency Ratio = (Population aged 0–14 + Population aged 65 & above) ÷ Population aged 15–64 × 100.
• Working-age population: Generally 15–64 years.
• Dependent population: Generally 0–14 years and 65 years & above.
• A lower dependency ratio is associated with the possibility of a demographic dividend, where a larger share of the population is in the working-age group.
• Demographic Dividend refers to the economic growth potential resulting from an increasing proportion of the working-age population.
• India is expected to benefit from its demographic dividend for several decades, provided there is adequate investment in education, healthcare, and employment generation.
• Population and age-structure data in India are primarily collected through the Population Census and the Sample Registration System (SRS).

Answer: (C) 2 and 4 only

Explanation

A decrease in the Statutory Liquidity Ratio (SLR) allows banks to lend more, increasing the money supply and aggregate demand, which can be inflationary. Similarly, the abolition of the Cash Reserve Ratio (CRR) would release a large amount of funds for lending, also increasing money supply and causing inflation. On the other hand, issuing RBI bonds and raising the Bank Rate reduce liquidity and are anti-inflationary measures.

Exam Facts

• SLR (Statutory Liquidity Ratio): Percentage of a bank’s Net Demand and Time Liabilities (NDTL) to be maintained in liquid assets such as cash, gold, and approved securities.
• Decrease in SLR → More bank lending → Higher money supply → Inflationary.
• CRR (Cash Reserve Ratio): Portion of NDTL that banks must keep as cash with the Reserve Bank of India (RBI).
• Decrease/Abolition of CRR → More funds available for lending → Inflationary.
• Bank Rate: The rate at which the RBI lends to commercial banks for the long term. Increase in Bank Rate makes borrowing costlier and reduces money supply.
• Open Market Operations (OMOs): When the RBI sells government securities/bonds, it absorbs liquidity from the market, making it an anti-inflationary measure.
• The Reserve Bank of India (RBI) regulates liquidity through instruments such as Repo Rate, Reverse Repo Rate, CRR, SLR, and OMOs.

Answer: (A) Russia

Explanation

The concept of Five-Year Plans was borrowed from the former Soviet Union (USSR/Russia), which introduced centralized economic planning under Joseph Stalin in 1928. India adopted this model after Independence to achieve planned economic development. However, the Five-Year Plans are not mentioned in the Indian Constitution; they were implemented through the Planning Commission.

Exam Facts

• The First Five-Year Plan of the USSR was launched in 1928 under Joseph Stalin.
• India’s First Five-Year Plan was implemented during 1951–1956, focusing on agriculture, irrigation, and power.
• The Planning Commission was established on 15 March 1950 by a Cabinet Resolution, not by the Constitution.
• The Prime Minister served as the Chairperson of the Planning Commission.
• The Planning Commission was replaced by NITI Aayog on 1 January 2015.
• NITI Aayog was established by a Cabinet Resolution and serves as the Government of India’s premier policy think tank.
• Plan Holiday (1966–1969) consisted of three Annual Plans due to wars, droughts, and economic instability.

Answer: (D) Investment spending by public companies

Explanation

Public expenditure refers to expenditure incurred by the government from the public exchequer for administration, defence, welfare, subsidies, and debt servicing. Investment spending by public companies (Public Sector Enterprises) is considered corporate expenditure, not government public expenditure, because it is made from the companies’ own funds and balance sheets.

Exam Facts

• Public expenditure is the expenditure incurred by the Central, State, and Local Governments for public purposes.
• Major components of public expenditure include defence, subsidies, interest payments, pensions, education, healthcare, and infrastructure.
• Interest payment on public debt is a revenue expenditure because it does not create assets.
• Subsidies are financial assistance provided by the government to reduce the cost of goods or services.
• Capital expenditure creates assets or reduces liabilities (e.g., construction of roads, railways, and irrigation projects).
• Revenue expenditure includes salaries, pensions, subsidies, interest payments, and administrative expenses.
• Public Sector Enterprises (PSEs/PSUs) are government-owned companies, but their investments from internal resources are not treated as government public expenditure.

Answer: (D) Petroleum, Oil and Lubricants

Explanation

India imports a large share of its crude oil and petroleum products to meet domestic energy demand. As a result, Petroleum, Oil and Lubricants (POL) generally account for the largest share of India’s import bill. Although imports of electronic goods and gold are also significant, they are usually lower than POL imports.

Exam Facts

• Petroleum, Oil and Lubricants (POL) are traditionally the largest component of India’s merchandise imports.
• India imports over 80% of its crude oil requirement, making it highly dependent on international oil markets.
• Major sources of India’s crude oil imports include countries in the Middle East, such as Iraq, Saudi Arabia, the UAE, and Kuwait, along with Russia in recent years.
• Gold is one of India’s major import items due to strong demand for jewellery and investment.
• Electronic goods have become one of the fastest-growing categories of imports, driven by demand for smartphones, semiconductors, and consumer electronics.
• Petroleum products, engineering goods, gems & jewellery, chemicals, and pharmaceuticals are among India’s major export categories.
• The Directorate General of Foreign Trade (DGFT) functions under the Ministry of Commerce & Industry and is responsible for India’s foreign trade policy.

Answer: (C) Quaternary

Explanation

The Quaternary sector represents the most modern and knowledge-based part of the service sector. It includes activities related to information technology (IT), research and development (R&D), data processing, consultancy, education, and innovation. These activities rely primarily on intellectual skills rather than physical labour.

Exam Facts

• Primary Sector: Agriculture, forestry, fishing, mining, and animal husbandry.
• Secondary Sector: Manufacturing, construction, electricity, gas, and water supply.
• Tertiary Sector: Services such as trade, transport, communication, banking, insurance, tourism, and healthcare.
• Quaternary Sector: Knowledge-based services including IT, software, R&D, education, data analytics, and consultancy.
• Quinary Sector: Highest level of decision-making and policy formulation, including top executives, government policymakers, judges, scientists, and senior administrators.
• The service sector contributes the largest share to India’s Gross Value Added (GVA) and Gross Domestic Product (GDP).
• Growth of the IT and IT-enabled Services (ITeS) industry has made the quaternary sector a major driver of India’s economy.

Answer: (A) Silver

Explanation

The Silver Revolution refers to the rapid increase in the production of eggs and poultry in India. It was driven by the expansion of commercial poultry farming, improved breeding techniques, better veterinary care, and modern management practices. This revolution significantly increased egg production and strengthened India’s poultry sector.

Exam Facts

• Silver Revolution is associated with egg and poultry production in India.
• White Revolution is associated with milk production and was led by Dr. Verghese Kurien through Operation Flood.
• Green Revolution refers to the increase in food grain production, especially wheat and rice, through HYV seeds, irrigation, and fertilizers.
• Blue Revolution is related to the development of fisheries and aquaculture.
• Golden Revolution is associated with the production of horticultural crops, especially fruits, vegetables, honey, and flowers.
• India is one of the largest producers of eggs in the world, with the poultry sector playing a major role in agricultural growth.
• The National Livestock Mission (NLM) promotes sustainable growth of the livestock and poultry sectors.

Answer: (D) Grants

Explanation

Capital receipts are receipts that either create liabilities or reduce government assets. Loan recoveries, provident fund deposits (classified under public account liabilities), and proceeds from PSU disinvestment are treated as capital receipts. Grants, however, are revenue receipts because they do not create liabilities or reduce government assets.

Exam Facts

• Capital Receipts either create liabilities (e.g., borrowings, provident fund deposits) or reduce assets (e.g., recovery of loans, disinvestment).
• Revenue Receipts neither create liabilities nor reduce assets; they include tax revenue, non-tax revenue, and grants.
• Loan recoveries by the government are capital receipts because they reduce government financial assets.
• PSU disinvestment receipts are capital receipts as they reduce the government’s ownership of assets.
• Provident Fund deposits are treated as capital receipts under Public Account, as the government has an obligation to repay them.
• Grants-in-aid received by the government are classified as revenue receipts.
• The Annual Financial Statement (Budget) is presented under Article 112 of the Constitution of India.

Answer: (B) 1, 2 and 4

Explanation

The Capital Account of the Balance of Payments (BoP) records transactions that involve capital transfers and changes in financial assets and liabilities, such as foreign loans, Foreign Direct Investment (FDI), and portfolio investment. Remittances from abroad are unilateral transfers and are recorded under the Current Account, not the Capital Account.

Exam Facts

• Balance of Payments (BoP) is a systematic record of all economic transactions between the residents of a country and the rest of the world during a given period.
• The Current Account includes exports and imports of goods and services, primary income, and secondary income (including remittances).
• The Capital/Financial Account includes Foreign Direct Investment (FDI), Foreign Portfolio Investment (FPI), external commercial borrowings (foreign loans), and other capital flows.
• Remittances sent by Indians working abroad are recorded as secondary income (current transfers) under the Current Account.
• Foreign Direct Investment (FDI) involves a lasting interest and management control in an enterprise.
• Foreign Portfolio Investment (FPI) involves investment in shares, bonds, and other financial securities without management control.
• In India, the Reserve Bank of India (RBI) compiles and publishes the Balance of Payments (BoP) statistics.

Answer: (B) Financing, real estate and professional services

Explanation

Over the last decade, the Financing, Real Estate and Professional Services sector has consistently contributed the largest share of India’s Gross Value Added (GVA) at basic prices. The rapid growth of banking, financial services, insurance, real estate, and professional services has made this the leading contributor to India’s economy. It has generally outperformed manufacturing and other service sub-sectors in terms of GVA share.

Exam Facts

• Gross Value Added (GVA) measures the value of goods and services produced in an economy after deducting intermediate consumption.
• GVA at Basic Prices = GDP at Market Prices − Net Product Taxes (Product Taxes − Product Subsidies).
• The National Statistical Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) estimates and publishes India’s GVA and GDP.
• India’s economy is service sector-driven, with services contributing more than half of the country’s GVA.
• Financing, Real Estate and Professional Services include banking, insurance, real estate, business services, legal services, accounting, and consultancy.
• Other major contributors to GVA include Trade, Hotels, Transport, Communication & Broadcasting Services and Manufacturing.
• GVA is often preferred for measuring sector-wise economic performance, while GDP is used to measure the overall size of the economy.

Answer: (A) Green bonds

Explanation

Green bonds are debt instruments issued to raise funds exclusively for environmentally sustainable and climate-friendly projects. The proceeds are used for projects such as renewable energy, clean transportation, energy efficiency, pollution control, and sustainable water management. They promote sustainable development while enabling issuers to access long-term finance.

Exam Facts

• Green Bonds are fixed-income securities whose proceeds are earmarked for environmentally sustainable projects.
• Common areas financed include renewable energy, solar and wind power, clean transportation, sustainable buildings, waste management, and climate change mitigation.
• The Securities and Exchange Board of India (SEBI) issued the Green Debt Securities framework in 2017 for the issuance and listing of green bonds in India.
• The Government of India issued its first Sovereign Green Bonds in 2023 to finance public sector green infrastructure projects.
• The Reserve Bank of India (RBI) conducted auctions for Sovereign Green Bonds on behalf of the Government of India.
• Globally, the Green Bond Principles (GBP), developed by the International Capital Market Association (ICMA), provide voluntary guidelines for issuing green bonds.
• Green bonds are an important instrument for achieving sustainable development and climate finance goals.

Answer: (B) 1935

Explanation

The Reserve Bank of India (RBI) was established on 1 April 1935 under the provisions of the Reserve Bank of India Act, 1934. Initially, it was a privately owned institution and was nationalized on 1 January 1949. RBI is the central bank of India and is responsible for regulating the country’s monetary and financial system.

Exam Facts

• Reserve Bank of India (RBI) was established on 1 April 1935.
• It was established under the Reserve Bank of India Act, 1934.
• The RBI was nationalized on 1 January 1949.
• The recommendation to establish the RBI was made by the Hilton Young Commission (Royal Commission on Indian Currency and Finance), 1926.
• The Headquarters of the RBI was initially at Kolkata (1935) and was shifted to Mumbai in 1937.
• The RBI is the central bank of India and is responsible for monetary policy, currency issuance, regulation of banks, management of foreign exchange reserves, and financial stability.
• The Monetary Policy Committee (MPC) was constituted in 2016 under the Reserve Bank of India Act, 1934 (amended) to determine the policy repo rate.

Answer: (A) Corporation Tax

Explanation

Corporation Tax is levied by the Central Government on the profits of companies under the Income-tax Act, 1961. The other taxes—Professional Tax, Land Revenue, and Excise on alcoholic liquors for human consumption—fall under the jurisdiction of the State Governments as per the Seventh Schedule of the Constitution.

Exam Facts

• Corporation Tax is a Union Tax levied by the Central Government on the income of domestic and foreign companies.
• Professional Tax is levied by State Governments and local bodies under Article 276 of the Constitution.
• Land Revenue is a State subject under the State List (List II) of the Seventh Schedule.
• Excise Duty on alcoholic liquor for human consumption is levied by State Governments under the State List.
• The Union List (List I) contains subjects on which only Parliament can legislate, including corporation tax, customs duties, and taxes on income (other than agricultural income).
• Agricultural income tax, where applicable, is levied by State Governments.
• After the introduction of GST on 1 July 2017, many indirect taxes were subsumed, but alcoholic liquor for human consumption remains outside the GST regime.

Answer: (C) Securities and Exchange Board of India

Explanation

The Securities and Exchange Board of India (SEBI) is the statutory regulator of India’s securities and capital markets. It protects the interests of investors, regulates stock exchanges and market intermediaries, and promotes the orderly development of the securities market. SEBI was given statutory status through the SEBI Act, 1992.

Exam Facts

• SEBI stands for Securities and Exchange Board of India.
• SEBI was established on 12 April 1988 and became a statutory body under the SEBI Act, 1992.
• Headquarters: Mumbai, Maharashtra.
• SEBI regulates stock exchanges, mutual funds, brokers, merchant bankers, portfolio managers, credit rating agencies, and other market intermediaries.
• The primary objectives of SEBI are investor protection, regulation of the securities market, and promotion of market development.
• Major stock exchanges regulated by SEBI include the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
• SEBI has powers to inspect, investigate, impose penalties, and regulate insider trading and fraudulent trade practices.

Answer: (D) 1989

Explanation

The Jawahar Rozgar Yojana (JRY) was launched on 1 April 1989 by merging the National Rural Employment Programme (NREP) and the Rural Landless Employment Guarantee Programme (RLEGP). Its objective was to generate wage employment for the rural unemployed and underemployed while creating durable community assets. The scheme gave a significant role to Gram Panchayats in implementing rural development works.

Exam Facts

• Jawahar Rozgar Yojana (JRY) was launched on 1 April 1989.
• It was launched by Prime Minister Rajiv Gandhi.
• JRY was formed by merging NREP (1980) and RLEGP (1983).
• The main objective was generation of wage employment and creation of durable rural assets.
• Gram Panchayats were the principal implementing agencies under the scheme.
• In 1999, JRY was restructured into the Jawahar Gram Samridhi Yojana (JGSY).
• Later, rural wage employment programmes were merged into the National Rural Employment Guarantee Act (NREGA), 2005, renamed Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2009.

Answer: (B) Second Five-Year Plan

Explanation

Prasanta Chandra Mahalanobis is associated with the Second Five-Year Plan (1956–1961) through the Mahalanobis Model. The plan emphasized the development of heavy and basic industries to achieve rapid industrialization and long-term economic growth. It gave a leading role to the public sector.

Exam Facts

• Second Five-Year Plan: 1956–1961.
• It was based on the Mahalanobis Model, formulated by Prasanta Chandra Mahalanobis.
• The main objective was rapid industrialization with emphasis on heavy and capital goods industries.
• The plan gave a dominant role to the public sector in strategic industries.
• Prasanta Chandra Mahalanobis (1893–1972) was a renowned Indian statistician and economist.
• He founded the Indian Statistical Institute (ISI), Kolkata, in 1931.
• The Mahalanobis Distance, a widely used statistical measure, was developed by him.

Answer: (C) Wealth Tax

Explanation

A direct tax is a tax whose burden is borne by the same person on whom it is imposed and cannot be shifted to another person. Wealth Tax was a direct tax levied on the net wealth of certain individuals and entities under the Wealth-tax Act, 1957. VAT, GST, and Excise Duty are indirect taxes, as their burden can be passed on to consumers.

Exam Facts

• Direct Taxes include Income Tax, Corporation Tax, Capital Gains Tax, and formerly Wealth Tax.
• Wealth Tax was levied under the Wealth-tax Act, 1957.
• Wealth Tax was abolished from the Financial Year 2015–16 (Assessment Year 2016–17) through the Finance Act, 2015.
• After abolishing Wealth Tax, the government introduced an additional 2% surcharge (raising the effective surcharge on high-income individuals) on the super-rich.
• GST (Goods and Services Tax) is an indirect tax introduced on 1 July 2017 through the 101st Constitutional Amendment Act, 2016.
• VAT (Value Added Tax) has largely been subsumed under GST, except for items such as petroleum products and alcoholic liquor for human consumption.
• Central Excise Duty has also been largely subsumed under GST, but it continues to apply to petroleum products and tobacco products.

Answer: (A) 5 crores to 75 crores rupees

Explanation

This question is based on the proposed turnover-based classification of MSMEs approved by the Union Cabinet in 2018, under which a small enterprise was defined as one having an annual turnover of more than ₹5 crore but not exceeding ₹75 crore. Hence, Option (A) is correct for this PYQ.

Exam Facts

• The MSME Development Act, 2006 provides the legal framework for the classification and promotion of MSMEs.
• The 2018 Cabinet proposal suggested turnover-based classification:
  • Micro: Up to ₹5 crore turnover
  • Small: More than ₹5 crore to ₹75 crore
  • Medium: More than ₹75 crore to ₹250 crore.
• The current MSME classification (effective 1 July 2020) is based on both investment and annual turnover.
• Current limits (2020–2025):
  • Micro: Investment ≤ ₹1 crore, Turnover ≤ ₹5 crore
  • Small: Investment ≤ ₹10 crore, Turnover ≤ ₹50 crore
  • Medium: Investment ≤ ₹50 crore, Turnover ≤ ₹250 crore.
• The Udyam Registration Portal is the official portal for MSME registration.
• The Ministry of Micro, Small and Medium Enterprises (MSME) is the nodal ministry for MSME development.

Answer: (A) January 1, 2015

Explanation

NITI Aayog (National Institution for Transforming India) was established on 1 January 2015 by a Cabinet Resolution. It replaced the Planning Commission with the objective of promoting cooperative and competitive federalism, fostering innovation, and providing strategic policy advice to the Government of India.

Exam Facts

• NITI Aayog was established on 1 January 2015.
• It replaced the Planning Commission, which had been established on 15 March 1950.
• NITI stands for National Institution for Transforming India.
• It was created by a Cabinet Resolution, not by a constitutional amendment or an Act of Parliament.
• The Prime Minister of India is the Chairperson of NITI Aayog.
• The Vice-Chairperson is appointed by the Prime Minister.
• Key objectives include cooperative federalism, competitive federalism, sustainable development, innovation, and evidence-based policy formulation.
• NITI Aayog prepares important reports such as the SDG India Index, Multidimensional Poverty Index (MPI), India Innovation Index, and Export Preparedness Index.
• Questions on NITI Aayog, Planning Commission, Five-Year Plans, and cooperative federalism are frequently asked in WBCS, UPSC, SSC, Banking, and other State PSC examinations.

Answer: (C) Reserve Bank of India

Explanation

The Reserve Bank of India (RBI) has the sole authority to issue and manage currency notes in India under the Reserve Bank of India Act, 1934. The RBI arranges the printing of all banknotes except the ₹1 note. The ₹1 note is issued by the Ministry of Finance, though it is circulated as legal tender.

Exam Facts

• The Reserve Bank of India (RBI) was established on 1 April 1935 under the RBI Act, 1934.
• Under Section 22 of the RBI Act, 1934, the RBI has the exclusive right to issue banknotes in India.
• The ₹1 note is issued by the Ministry of Finance, Government of India, and bears the signature of the Finance Secretary.
• All other banknotes (₹2 to ₹500; the ₹1,000 denomination is no longer in circulation) are issued by the RBI and bear the signature of the RBI Governor.
• Coins are issued by the Government of India under the Coinage Act, 2011, while their circulation is managed by the RBI.
• India has four currency note printing presses:
  • Nashik (Maharashtra) – Security Printing and Minting Corporation of India Limited (SPMCIL)
  • Dewas (Madhya Pradesh) – SPMCIL
  • Mysuru (Karnataka) – Bharatiya Reserve Bank Note Mudran Pvt. Ltd. (BRBNMPL)
  • Salboni (West Bengal) – BRBNMPL
• The RBI follows the Minimum Reserve System for currency issuance, introduced in 1956.

Answer: (D) Continuous increase in price level

Explanation

Inflation is a continuous and sustained increase in the general price level of goods and services over a period of time. It reduces the purchasing power of money, meaning the same amount of money buys fewer goods and services. A one-time rise in prices is not considered inflation.

Exam Facts

• Inflation is defined as a persistent increase in the general price level over time.
• Consumer Price Index (CPI) is the primary measure of inflation in India and is compiled by the National Statistical Office (NSO).
• The Wholesale Price Index (WPI) measures inflation at the wholesale level and is released by the Office of the Economic Adviser, Ministry of Commerce & Industry.
• The Reserve Bank of India (RBI) follows a Flexible Inflation Targeting (FIT) framework with a target of 4% CPI inflation and a tolerance band of ±2% (2%–6%).
• Major types of inflation include Demand-pull Inflation, Cost-push Inflation, and Built-in (Wage-price) Inflation.
• Deflation is a sustained decrease in the general price level, while Disinflation is a decline in the rate of inflation (prices still rise, but more slowly).
• The Monetary Policy Committee (MPC), constituted in 2016 under the RBI Act, 1934, decides the policy repo rate to help maintain price stability.

Answer: (D) Crude petroleum

Explanation

Crude petroleum is the largest imported commodity in India by value. India imports a major portion of its crude oil requirement because domestic production is insufficient to meet the country’s energy demand. The imported crude oil is refined in Indian refineries into petroleum products such as petrol, diesel, and LPG.

Exam Facts

• Crude petroleum is the largest item in India’s import basket.
• India imports more than 85% of its crude oil requirement from foreign countries.
• Major suppliers of crude oil to India include Russia, Iraq, Saudi Arabia, the United Arab Emirates (UAE), and the United States.
• Petroleum products (refined fuels such as diesel, petrol, and aviation turbine fuel) are among India’s major export commodities, while crude petroleum is a major import.
• Other major imports include gold, electronic goods, coal, machinery, chemicals, and precious stones.
• India’s foreign trade policy is administered by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry.
• The Balance of Trade (BoT) is the difference between the value of merchandise exports and imports.

Answer: (B) Rs. 1,00,000

Explanation

The Gatidhara Scheme is a flagship self-employment scheme of the Government of West Bengal that provides financial assistance to unemployed youth for purchasing commercial vehicles. Under the scheme, the beneficiary can receive a government subsidy of up to ₹1,00,000 or 30% of the vehicle cost, whichever is lower.

Exam Facts

• Gatidhara Scheme was launched by the Government of West Bengal to generate self-employment in the transport sector.
• It is administered by the Transport Department, Government of West Bengal.
• The scheme provides a maximum subsidy of ₹1,00,000 or 30% of the vehicle cost, whichever is less.
• It is intended for registered unemployed youth enrolled in the Employment Bank of West Bengal.
• Eligible beneficiaries can purchase commercial vehicles such as taxis, auto-rickshaws, goods carriers, buses, and other transport vehicles under the scheme.
• The scheme was initially launched in August 2014 and later implemented through the Transport Department.
• Exam Tip: Remember “Gatidhara = Transport Sector + Employment Bank + ₹1 lakh maximum subsidy.”

Answer: (C) 1948

Explanation

The First Industrial Policy Resolution (IPR) was announced on 6 April 1948. It laid the foundation of India’s mixed economy, recognizing the role of both the public and private sectors in industrial development. It also identified industries where the government would have exclusive or dominant control.

Exam Facts

• First Industrial Policy Resolution (IPR): 6 April 1948.
• It introduced the concept of a Mixed Economy, with coexistence of public and private sectors.
• The Industrial Policy Resolution, 1956 is known as the Economic Constitution of India because it gave a dominant role to the public sector.
• The Industrial Policy Resolution, 1956 classified industries into Schedule A, Schedule B, and Schedule C.
• The New Industrial Policy, 1991 introduced Liberalisation, Privatisation, and Globalisation (LPG) and abolished industrial licensing for most industries.
• The Industries (Development and Regulation) Act, 1951 empowered the Central Government to regulate industrial development.
• The Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce & Industry is responsible for industrial policy.

Answer: (A) Exports Cheaper and Imports Costlier

Explanation

When the Indian Rupee depreciates against the US Dollar, more rupees are required to buy one dollar. As a result, Indian exports become cheaper for foreign buyers, increasing their competitiveness, while imports become more expensive for Indian consumers and businesses.

Exam Facts

• Currency Depreciation is a decline in the value of a currency under a floating exchange rate system due to market forces.
• Depreciation of the Rupee generally leads to:
  • Exports becoming cheaper
  • Imports becoming costlier
• Currency Appreciation has the opposite effect: exports become costlier and imports become cheaper.
• Depreciation is different from Devaluation. Depreciation occurs due to market forces, whereas Devaluation is a deliberate reduction in a currency’s value by the government or central bank under a fixed exchange rate system.
• A depreciating rupee increases the import bill, especially for crude oil, gold, and electronic goods.
• The Reserve Bank of India (RBI) manages exchange rate volatility through interventions in the foreign exchange market, but India follows a market-determined exchange rate system.
• India’s foreign exchange reserves are maintained and managed by the RBI to ensure external sector stability.

Answer: (A) July, 1991

Explanation

India formally introduced Economic Reforms in July 1991 in response to a severe Balance of Payments (BoP) crisis. The reforms, popularly known as LPG Reforms (Liberalisation, Privatisation, and Globalisation), aimed to open the economy, reduce government control, and encourage private and foreign investment.

Exam Facts

• Economic Reforms were introduced in July 1991 under the government of P. V. Narasimha Rao.
• Dr. Manmohan Singh, the then Finance Minister, presented the 1991 Reform Budget.
• The reforms are known as LPG Reforms:
  • L – Liberalisation
  • P – Privatisation
  • G – Globalisation
• The reforms were initiated due to a Balance of Payments (BoP) crisis, high fiscal deficit, rising inflation, and low foreign exchange reserves.
• The New Industrial Policy, 1991 abolished industrial licensing for most industries and reduced the role of the public sector.
• Foreign Direct Investment (FDI) norms were liberalized, and the MRTP Act, 1969 was amended to reduce restrictions on large business houses.
• The reforms were supported by financial assistance from the International Monetary Fund (IMF) and the World Bank.

Answer: (A) 8th November, 2016

Explanation

The Government of India announced the demonetisation of ₹500 and ₹1,000 currency notes on 8 November 2016. The objective was to curb black money, counterfeit currency, terror financing, and promote digital payments. The old notes ceased to be legal tender from midnight of the same day, subject to specified exemptions.

Exam Facts

• Demonetisation was announced on 8 November 2016 by Prime Minister Narendra Modi.
• The old ₹500 and ₹1,000 notes ceased to be legal tender from 9 November 2016.
• New ₹500 and ₹2,000 currency notes were introduced after demonetisation.
• The move was carried out under Section 26(2) of the Reserve Bank of India Act, 1934.
• The major objectives were to curb black money, eliminate counterfeit currency, stop terror financing, and encourage a digital economy.
• The Reserve Bank of India (RBI) managed the withdrawal of old notes and the issuance of new currency.
• In May 2023, the RBI announced the withdrawal of ₹2,000 notes from circulation, though they continue to remain legal tender.

Answer: (A) 1969

Explanation

The nationalisation of 14 major commercial banks took place on 19 July 1969 during the tenure of Prime Minister Indira Gandhi. The objective was to expand banking services to rural areas, mobilize savings, and provide institutional credit to agriculture and priority sectors.

Exam Facts

• 14 major commercial banks were nationalised on 19 July 1969.
• The nationalisation was carried out under the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, later replaced by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
• Prime Minister: Indira Gandhi.
• The nationalised banks had deposits of ₹50 crore or more.
• A second round of nationalisation took place on 15 April 1980, when 6 more commercial banks were nationalised.
• After the 1980 nationalisation, 20 commercial banks were under government ownership.
• The nationalisation aimed to promote financial inclusion, rural banking, agricultural credit, and lending to priority sectors.

Answer: (B) Loans not repaid within stipulated time

Explanation

A Non-Performing Asset (NPA) is a loan or advance on which the borrower has failed to pay interest or principal for more than 90 days. Such assets stop generating income for banks and adversely affect their profitability and financial health. A high level of NPAs indicates poor asset quality and increased credit risk.

Exam Facts

• An NPA is a loan or advance where interest and/or principal remains overdue for more than 90 days (RBI norm).
• NPAs are classified into:
  • Sub-standard Assets – NPA for up to 12 months.
  • Doubtful Assets – Remain sub-standard for more than 12 months.
  • Loss Assets – Considered uncollectible or of little value.
• The Reserve Bank of India (RBI) prescribes norms for asset classification and provisioning.
• Gross NPA (GNPA) is the total value of NPAs, while Net NPA (NNPA) is Gross NPA minus provisions made by the bank.
• High NPAs reduce bank profitability, restrict fresh lending, and weaken the banking system.
• To address stressed assets, the Insolvency and Bankruptcy Code (IBC), 2016 was enacted for time-bound resolution of insolvency.
• Other measures to reduce NPAs include SARFAESI Act, 2002, Debt Recovery Tribunals (DRTs), and Asset Reconstruction Companies (ARCs).

Answer: (B) UNDP

Explanation

The Human Development Index (HDI) is published annually by the United Nations Development Programme (UNDP) in its Human Development Report (HDR). It measures a country’s overall development based on health, education, and standard of living, rather than income alone.

Exam Facts

• HDI is published by the United Nations Development Programme (UNDP).
• It was introduced in 1990 by Mahbub ul Haq, with significant contributions from Amartya Sen.
• The Human Development Report (HDR) is released annually by the UNDP.
• HDI is based on three dimensions:
  • Health: Life expectancy at birth.
  • Education: Mean years of schooling and Expected years of schooling.
  • Standard of Living: Gross National Income (GNI) per capita (PPP).
• The HDI value ranges from 0 to 1, with a higher value indicating higher human development.
• Countries are classified into Very High, High, Medium, and Low Human Development categories.
• India is classified under the Medium Human Development category in recent Human Development Reports.

Answer: (A) Arun Jaitley

Explanation

The Goods and Services Tax (GST) was introduced in India on 1 July 2017 by the Finance Minister, Arun Jaitley, during the government led by Prime Minister Narendra Modi. GST replaced multiple indirect taxes with a unified tax system, creating the concept of “One Nation, One Tax.”

Exam Facts

• GST was launched on 1 July 2017.
• It was introduced through the Constitution (101st Amendment) Act, 2016.
• Arun Jaitley was the Finance Minister who introduced GST.
• Prime Minister at the time: Narendra Modi.
• GST subsumed several indirect taxes such as Central Excise Duty, Service Tax, VAT (on most goods), Central Sales Tax (partly), and Entry Tax.
• GST has four main tax slabs: 5%, 12%, 18%, and 28% (with special rates for certain goods and services).
• The GST Council is constituted under Article 279A of the Constitution and is chaired by the Union Finance Minister.

Answer: (A) Governor, Reserve Bank of India

Explanation

The ₹100 currency note is issued by the Reserve Bank of India (RBI) and bears the signature of the RBI Governor. Under the Reserve Bank of India Act, 1934, all banknotes issued by the RBI (except the ₹1 note) carry the Governor’s signature. The ₹1 note is issued by the Ministry of Finance and bears the signature of the Finance Secretary.

Exam Facts

• The ₹100 note is signed by the Governor of the Reserve Bank of India (RBI).
• Under Section 22 of the RBI Act, 1934, the RBI has the exclusive right to issue banknotes in India.
• The ₹1 note is issued by the Ministry of Finance and is signed by the Finance Secretary.
• All banknotes from ₹2 onwards (currently ₹2 is not in circulation) bear the signature of the RBI Governor.
• Coins are issued by the Government of India under the Coinage Act, 2011, while their circulation is managed by the RBI.
• The RBI was established on 1 April 1935 and was nationalized on 1 January 1949.
• The RBI follows the Minimum Reserve System for currency issuance, adopted in 1956.

Answer: (B) Single-digit > 0

Explanation

India generally aims to maintain low and stable inflation, which is usually in the single-digit positive range. The Reserve Bank of India (RBI) follows a Flexible Inflation Targeting (FIT) framework with a target of 4% and a tolerance band of 2%–6%, keeping inflation positive but moderate.

Exam Facts

• Inflation is a continuous increase in the general price level of goods and services.
• The RBI’s inflation target is 4%, with a tolerance band of ±2% (2%–6%).
• India primarily measures inflation using the Consumer Price Index (CPI-Combined).
• The National Statistical Office (NSO) under MoSPI compiles the Consumer Price Index (CPI).
• The Wholesale Price Index (WPI) is compiled by the Office of the Economic Adviser, Ministry of Commerce & Industry.
• The Monetary Policy Committee (MPC), constituted in 2016, determines the policy repo rate to maintain price stability.
• Deflation refers to a persistent fall in the general price level, while Disinflation means a decline in the rate of inflation, not a fall in prices.

Answer: (A) 62%

Explanation

The service sector is the largest contributor to India’s economy, accounting for around 62% of GDP (at the time relevant to this PYQ). It includes activities such as trade, transport, banking, insurance, real estate, IT, tourism, healthcare, and education, making it the primary driver of India’s economic growth.

Exam Facts

• The service sector contributes about 55–60% of India’s Gross Value Added (GVA) in recent years and has historically contributed around 60–62% of GDP.
• Major service sector activities include trade, hotels, transport, communication, banking, insurance, real estate, IT, education, and healthcare.
• India is one of the world’s leading exporters of IT and IT-enabled Services (ITeS).
• The National Statistical Office (NSO) under MoSPI estimates India’s GDP and GVA.
• Gross Value Added (GVA) = GDP – Net Product Taxes (Product Taxes – Product Subsidies).
• The tertiary sector is another name for the service sector.
• The service sector is the largest contributor to India’s GDP, followed by the industrial (secondary) and agricultural (primary) sectors.

Answer: (A) Agricultural Distress

Explanation

Farmers’ suicides in India are primarily associated with agricultural distress, which includes factors such as crop failure, indebtedness, low farm income, rising input costs, inadequate institutional credit, and price fluctuations. While climate-related events may worsen the situation, the broader and widely accepted explanation is agricultural distress.

Exam Facts

• Agricultural distress refers to the economic hardship faced by farmers due to low productivity, debt, crop losses, and inadequate returns.
• Major causes include crop failure, indebtedness, lack of irrigation, high input costs, volatile market prices, and limited access to institutional credit.
• The Minimum Support Price (MSP) is announced by the Government of India to provide remunerative prices to farmers.
• The Commission for Agricultural Costs and Prices (CACP) recommends MSPs for major agricultural crops.
• Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016, provides insurance coverage against crop losses.
• PM-KISAN (Pradhan Mantri Kisan Samman Nidhi), launched in 2019, provides income support to eligible farmer families.
• The National Crime Records Bureau (NCRB) publishes annual data on farmer and agricultural labourer suicides in its Accidental Deaths & Suicides in India (ADSI) report.

Answer: (B) Professor Amartya Kumar Sen

Explanation

Professor Amartya Kumar Sen became the first Indian to receive the Nobel Memorial Prize in Economic Sciences in 1998. He was awarded for his pioneering contributions to welfare economics, social choice theory, poverty, famine analysis, and human development. Although Abhijit Vinayak Banerjee also won the Nobel Prize in Economics, it was later in 2019.

Exam Facts

• Amartya Kumar Sen won the Nobel Memorial Prize in Economic Sciences in 1998.
• He was awarded for his work in welfare economics, social choice theory, and poverty and famine analysis.
• His famous work includes the Capability Approach, which influenced the concept of Human Development.
• Abhijit Vinayak Banerjee won the Nobel Prize in Economics in 2019, jointly with Esther Duflo and Michael Kremer, for their experimental approach to alleviating global poverty.
• The Nobel Memorial Prize in Economic Sciences was established in 1968 by the Sveriges Riksbank (Central Bank of Sweden) and has been awarded since 1969.
• Unlike the original Nobel Prizes, the Economics Nobel was not included in Alfred Nobel’s 1895 will.
• The Nobel Prize is announced by the Royal Swedish Academy of Sciences.

Answer: (A) Poverty

Explanation

The Head Count Ratio (HCR) is the proportion (or percentage) of the population living below the poverty line. It is one of the simplest and most widely used measures of poverty, indicating the incidence of poverty but not its depth or severity.

Exam Facts

• Head Count Ratio (HCR) measures the percentage of people living below the Poverty Line.
• Formula: HCR = (Number of people below the Poverty Line ÷ Total Population) × 100.
• HCR measures the incidence of poverty, but it does not measure the intensity or severity of poverty.
• The Tendulkar Committee (2009) recommended a poverty estimation methodology based on consumption expenditure.
• The Rangarajan Committee (2014) proposed a revised methodology and a higher poverty line than the Tendulkar Committee.
• NITI Aayog publishes the National Multidimensional Poverty Index (MPI), while the UNDP publishes the Global Multidimensional Poverty Index jointly with the Oxford Poverty and Human Development Initiative (OPHI).
• Poverty estimates in India have traditionally been prepared using data from the National Sample Survey Office (NSSO), now part of the National Statistical Office (NSO).

Answer: (B) Unorganised Sector

Explanation

In India, unemployment and underemployment are predominantly concentrated in the unorganised (informal) sector. This sector is characterized by low wages, seasonal and casual employment, lack of job security, and absence of social security benefits. It employs the majority of India’s workforce.

Exam Facts

• The unorganised (informal) sector employs over 90% of India’s workforce.
• It includes workers engaged in agriculture, construction, small shops, domestic work, street vending, and small-scale enterprises.
• Common problems of the unorganised sector include low wages, low productivity, job insecurity, lack of social security, and poor working conditions.
• The organised sector consists of enterprises registered with the government and governed by labour laws, offering regular wages and social security benefits.
• The Periodic Labour Force Survey (PLFS), conducted by the National Statistical Office (NSO), is the primary source of employment and unemployment data in India.
• Major types of unemployment in India include disguised, seasonal, structural, frictional, cyclical, and educated unemployment.
• The Code on Social Security, 2020 aims to extend social security benefits to workers in the organised as well as unorganised sectors.

Answer: (B) Indirect Taxes

Explanation

GDP at Market Prices (GDPMP) includes indirect taxes imposed on goods and services, whereas GDP at Factor Cost (GDPFC) measures the income earned by factors of production. Strictly speaking:

GDP at Market Prices = GDP at Factor Cost + Net Indirect Taxes (Indirect Taxes − Subsidies).

Since Net Indirect Taxes is not given as an option, the expected answer is Indirect Taxes.

Exam Facts

• GDP at Market Prices (GDPMP) is the value of final goods and services including product taxes.
• GDP at Factor Cost (GDPFC) is based on the income earned by factors of production (wages, rent, interest, and profit).
• Net Indirect Taxes = Indirect Taxes − Subsidies.
• Formula: GDPMP = GDPFC + Net Indirect Taxes.
• Since 2015, India officially reports GDP at Market Prices and Gross Value Added (GVA) at Basic Prices instead of GDP at Factor Cost.
• GVA at Basic Prices = GDP at Market Prices − Net Product Taxes.
• The National Statistical Office (NSO) under MoSPI compiles India’s GDP and GVA estimates.