ECONOMY:

Insights IAS Adithya G

Economy Previous Years
Questions (2011-2020)
Themes
• Basic concepts and macroeconomics (GDP, GNP, NI)
• Planning and reforms (FYP, NITI Aayog, LPG, 1991)
• Human Development (Poverty, inequality and
unemployment)
• Banking and Money (Monetary policy)
• Financial markets (capital market, money market)
• Industry and infrastructure:
• External sector and international institutions (BOP, FDI, FII,
capital account, currency Devaluation, Depreciation, IMF,
WB)
• Public finance (Fiscal policy and Budget, Taxation)
• Schemes
• Inflation
• Miscellaneous
 Indian Economy (2011-2022)
Basic concepts and Planning and Reforms
Inflation Macroeconomics 3%
4% Miscellaneous 4%
2%
Human Development
Schemes 6%
13%

Banking and
Public finance Money
9% 23%

Financial markets
2%

Industry and Infrastructure

External sector and
7%
International Institutions
27%

Basic concepts and Macroeconomics Planning and Reforms

Human Development Banking and Money
Financial markets Industry and Infrastructure
External sector and International Institutions Public finance
Schemes Inflation
Miscellaneous
Total Number of Questions: 242

Themes Number of Questions

Basic concepts and macroeconomics 11
Planning and reforms 08
Human Development 16
Banking and Money 52
Financial markets 05
Industry and infrastructure 16
External sector and international institutions 62

Public finance 21
Schemes 32
Inflation 10
Miscellaneous 09
Approach
• Number of questions: 15-20 qns
• Conceptual questions
• Division of syllabus
• Macro-economics
• International Organization: WTO, Bretton woods and other multilateral
organization
• Different sectors of economy
• Human development and Welfare economics
• Economics vs Economy
• Economics is the social science that studies the production, distribution, and consumption of goods and
services
• The economy is the system in which goods and services are produced, exchanged, and consumed.

• Macro Economics vs Micro Economics

• Macroeconomics looks at the economy as a whole
• Microeconomics studies the behavior of individual economic units

• Economic Activities vs non-Economic activities

• Economic activities are activities that involve the production, distribution, and consumption of goods
and services for financial gain
Terms associated with Economic Activities
• Production:
• It is the process of creating goods and services
• Consumption:
• It is the use of goods and services by households and individuals

• Distribution
• Investment
• Savings
• Public Finance
Basic concepts
TYPES of Economy:
1. Capitalist Economy:
Basic premise: Profit Maximization
 Role of State

2. Socialist Economy
3. Mixed Economy
4. Keynesian economics
Different Types of Economy:

• Closed vs Open economy

• Agrarian vs Industrial vs Service Economy
• Lower Income (<$1085 PCI)/ Lower Middle Income (1086-
$4255)/Upper Middle income ($4256-13205)/High Income economy
(>$13205)
• Traditional Economy
Emerging models in the field of economics
• Behavioural Economics
• Studies the psychological, social, and emotional factors that influence economic decision-making
• Richard Thaler : Nobel Prize in 2017
• Loss aversion
• Anchoring
• Framing effect

• Welfare Economics
• Experimental economics
• Circular Economics
Sectors of Economy:
• Primary Sector
• Secondary Sector
• Tertiary Sector
• Quaternary sector
• Quinary sector
• Real Sector vs Financial Sector:
• The real sector of the economy refers to the production of goods and services that are used to meet
the needs and wants of people. It is contrasted with the financial sector, which is concerned with the
management of money and financial instruments
• Examples of Real sectors:
• Agriculture
• Manufacturing
• Construction
• Services
Important Concepts of Micro-economics:
• Market Mechanism:
• It is a system or process through which buyers and sellers interact and exchange goods and services in
a market.

• Types of Market Mechanism:

• Perfect competition:
• Monopoly
• Oligopoly
• Monopolistic competition
• Monopsony
Demand and Supply
• Determinants of Demand
• Price
• Income
• Price of relative goods
Demand Curve
• Exceptions to Demand Curve:
• Giffen goods
• Luxury goods
• Emergency goods etc
Types of Demand
• Aggregate vs Individual demand
• Elastic vs Inelastic Demand
• Price Elasticity of Demand
• measure of the responsiveness of the quantity demanded of a good or service to a change in its
price

• Autonomous Demand
• Short term vs long term demand
• Complementary and Substitute goods
Supply Curve
Price Equilibrium
Income Elasticity Demand (IED)
• Measure of the responsiveness of the quantity demanded of a good or service to a change in income
• IED on different Goods:
• Normal Goods
• Inferior goods
• Luxury goods
• Necessities
Important Terms
• Opportunity Cost
• The cost of a particular decision or action in terms of the next best alternative
that is given up as a result
• Zero when :
• No substitute
• Free riders
• High unemployment
• Concept of Invisible hand
• Adam Smith: “ The Wealth of Nations”
Types of Goods: Depends on economic nature of good
• Primary Goods: Cotton
• Intermediate Goods: Yarn
• Finished Goods: Cloth
Types of Goods
• Consumer Goods: Durables and non-durables
• Capital Goods: Wear and Tear, Depreciation
• Complementary goods
• Substitute goods
• Veblen/snub goods
• Giffen goods
• Private goods
• Public Goods
• Merit Goods
• Demerit Goods
National Accounting
• Factors of production:
• Land
• Labour
• Capital
• Entrepreneur
• Factor Income
• Wage
• Profit
• Interest
• Rent

• GDP = Wages+ Interest + Rent +Profit + Dividend + Indirect

Taxes-Subsidies- Depreciation.
• Factor Cost vs Market Price
• Factor cost : Actual Cost of Production
• Market price: Factor cost + Indirect Taxes – subsidies
• Net Indirect Tax = Indirect Taxes – subsidies
GDP Measurement

• GDP is the total market value of all final goods and services
produced within the domestic boundaries of a country during a
specified period of time, normally a year
• Nominal GDP: GDP@ current prices
• Real GDP : GDP @ Constant prices
• Base Year
• Normal and Recent year,
• Availability of data
• Domestic Territory:
• Territorial Boundary
• Territorial waters
• Embassies and Consulates
• Oil Vessels, Ships, aircrafts and Military establishment etc
• It does not include
• territorial enclaves administered by foreign govt
• International organizations within geographic boundaries of
country
• GNP: It is the value of all finished goods and services owned by
a country's residents over a period of time
• GNP = GDP + NFIA
• GDP Deflator = Nominal GDP/Real GDP * 100
• In closed economy, GDP=GNP
• NDP = GDP - Depreciation
• NNP = GDP+NFIA – Depreciation
• Depreciation:
• Time
• Wear and Tear
• Change in Technology
• National Income = NNP @ FC
• NNP @ market price = GDP @FC – Depreciation + NFIA + Net
Indirect Tax
Terms
• Gross Investment
• Depreciation
• Net Investment
• Inventory
• Government Income
• Private Income : Total Income (Earned and Unearned) by private
sector
• Private Income = NI – Govt Income + Transfer
Payments
• Personal Income= Actual income received by households before
paying personal tax and non tax payments
• NI-undistributed profits-net interest payment made by households-corporate
tax + transfer payments to households by government
• Personal Disposable Income = (Personal Income – Taxes-non-tax
payment)
• Per Capita Income = NI/Population
Methods:
• Product / Value Addition Approach
• Income Approach
• Wage
• Profit
• Interest
• Rent
• Gross investment is that part of our final output that
comprises of capital goods.
• Net Investment = Gross investment – Depreciation

• Gross value added (GVA) is an economic productivity

metric that measures the contribution of a corporate
subsidiary, company or municipality to an economy,
producer, sector or region.
• GDP= GVA+ taxes on products –subsidies on products
• It provides the rupee value for the amount of goods and
services produced in an economy after deducting the cost
of inputs and raw materials that have gone into the
production of those goods and services.
• Expenditure Approach
• Pvt Final Consumption Expenditure
• Consumer Services
• Consumer non-durable goods
• Consumer durable goods

• Investment
• Business Fixed investment
• Inventory investment
• Residential construction investment
• Public Investment
• Govt expenditure: Eg, salary
• Net Exports
Factor Cost VS Basic Price vs Market Price
• Calculation of GDP at present:
• Base Year: 2011-12
• Factor Price to Market Price
• International practice of valuing industry-wise estimates as gross value added
(GVA) at basic prices
• System of National Accounts (SNA)
• Use of MCA21 database of Ministry of Corporate Affairs.
• Earlier Method:
• Total Income= Wages + Profit+ Rent +Interest
Under New Method we add:
Compensation to employees + Operating Surplus/Mixed Income + Consumption of Fixed
Capital
• GVA @FC = Compensation to employees + Operating Surplus/Mixed
Income + Consumption of Fixed Capital
• GVA @basic price = GVA @FC + Production taxes – Production
subsidy.
• GDP = GVA @ basic price + Product tax – product subsidy

• After 2015: India’s GDP is calculated as Real GDP @ Market price

• India is 5th largest economy
• What are excluded from GDP Measurement:
• Pure Financial transactions
• Buying and selling of shares
• Transfer payments
• Private transfers
• Self consumption and work
• Selling/ buying of Used goods
• Black Money
• Environment cost
• Care economy
• Limitations of GDP:
• Distribution of income is not accounted
• Gender inequality
• Environmental cost

• Green GNP
• HDI indicator
• Purchasing power parity
• India is 3rd largest
• Middle Income Trap
• Incremental Capital Output Ratio(ICOR):
• measure of the amount of capital (including both physical and financial capital) that is required to
produce one additional unit of output
• ICOR = (increase in capital / increase in output)

• Economic growth = Investment/ICOR

• Economic cycle:
• Growth
• Boom
• Slowdown/Recession
• Recovery (Atma Nirbhar Package)
• NSSO:
• Surveys on Consumer Expenditure, Employment – Unemployment, Social
Consumption (Health, Education etc.), Manufacturing Enterprises, Service
Sector Enterprises are carries out once in 5 years by them
• Survey of Land and Livestock Holding and Debt and Investment are carried
out once in 10 years.
 2011

1.Which of the following can aid in furthering the Government’s objective of inclusive growth?
1. Promoting Self-Help Groups
2. Promoting Micro, Small and Medium Enterprises
3. Implementing the Right to Education Act
•
• Select the correct answer using the codes given below:
• (a.) 1 only
• (b.) 1 and 2 only
• (c.) 2 and 3 only
• (d.) 1, 2 and 3
2011
2.In the context of Indian economy, consider the following statements :
1. The growth rate of GDP has steadily increased in the last five years.
2. The growth rate in per capita income has steadily increased in the last five years.
•
• Which of the statements given above is/are correct?
• (a.) 1 only
• (b.) 2 only
• (c.) Both 1 and 2
• (d.) Neither 1 nor 2
2013
• 3. The national income of a country for a given period is equal to the:
• (a) total value of goods and services produced by the nationals
• (b) sum of total consumption and investment expenditure
• (c) sum of personal income of all individuals
• (d) money value of final goods and services produced
2013
• 4. Economic growth in country X will necessarily have to occur if
• (a) there is technical progress in the world economy
• (b) there is population growth in X
• (c) there is capital formation in X
• (d) the volume of trade grows in the world economy
2014
5. If the interest rate is decreased in an economy, it will
(a)decrease the consumption expenditure in the economy
(b)increase the tax collection of the Government
(c)increase the investment expenditure in the economy
(d)increase the total savings in the economy
•
2015
6.A decrease in tax to GDP ratio of a country indicates which of the following?
1. Slowing economic growth rates
2. Less equitable distribution of national income
•
• Select the correct answer using the code given below.
• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2
2015
•
7.With reference to India economy, consider the following statements:
1. The rate of growth of real Gross Domestic Product has steadily increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade
•
• Which of the statement given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
•
2018
8.Increase in absolute and per capita real GNP do not connote a higher
level of economic development, if
(a)industrial output fails to keep pace with agricultural output.
(b)agricultural output fails to keep pace with industrial output.
(c)poverty and unemployment increase.
(d)imports grow faster than exports.
•
2018
9.Despite being a high saving economy, capital formation may not result
in significant increase in output due to
(a)weak administrative machinery
(b)illiteracy
(c)high population density
(d)high capital-output ratio
2018
If a commodity is provided free to the public by the Government, then

(a) The opportunity cost is zero.

(b) The opportunity cost is ignored.

(c) The opportunity cost is transferred from the consumers of the product to
the tax-paying public.

(d) The opportunity cost is transferred from the consumers of the product to
the Government.
 2018
Consider the following statements:
Human capital formation as a concept is better explained in terms of a
process which enables
1. Individuals of a country to accumulate more capital.
2. Increasing the knowledge, skill levels and capacities of the people of
the country.
3. Accumulation of tangible wealth.
4. Accumulation of intangible wealth.
Which of the statements given above is/are correct?
(a) 1 and 2
(b) 2 only
(c) 2 and 4 only
(d) 1, 3 and 4 only
2021
2022
Inflation
Inflation
• Terms associated:
• Inflation:
• Creeping inflation
• Walking/Trotting Inflation
• Runaway Inflation
• Hyperinflation

• Related terms:
• Disinflation
• Stagflation
• Deflation
• Reflation
• GDP Deflator
• Base year effect
• Protein Inflation
• Related Terms:
• Inflationary Gap and Deflationary gap
• Recession
• Depression
• Inflation spiral/Wage-price spiral
• Supressed Inflation vs open inflation
• Overheating of economy:
• when its productive capacity is unable to keep pace with growing aggregate
demand.
• Misery index:
• created by economist Arthur Okun
• calculated by adding the seasonally adjusted unemployment rate to the annual inflation rate
• Skewflation
• Agriflation
• Types of Inflation:
• Demand Pull
• Cost Push/Supply shock
• Supply side

• Structural Inflation/Bottleneck inflation

• Measuring Inflation:
• Producer Price Index
• WPI
• CPI
• Effects of Inflation:
• Debtors vs creditors
• Salaried/Fixed Income people
• Existing Investors and Business people
• Government bonds
• Exporter vs Importer
• Trade Balance
• Aggregate Demand
• Exchange Rate
• Employment
• Taxation: Indirect taxes and Direct taxes
• Measures to control Inflation:
• Fiscal measures
• Monetary measures: Bank Rate Policy, Reserve Ratios and Open Market
Operations (OMRs)
• Supply side
• Administrative measures
• Wholesale Price Index (WPI):
• Base year : 2011-12
• Office of Economic Advisor: Ministry of Commerce
• New series, do not include indirect tax
• Data from National Accounts and Enterprise Survey: MOSPI
• WPI Food Index:
• The Office of the Economic Adviser
• consist of 'Food Articles' from Primary Articles group and 'Food Products'
from Manufactured Products
• CPI-Industrial workers
• Compiled and maintained by the Labour Bureau,
• Base Year: 2016-17
• CPI (Agricultural Labours)
• Labour Bureau
• Base year: 1986-87
• CPI (Rural workers)
• Labour Bureau
• Base year: 1983
• Consumer Price Index (CPI):
• CPI- urban: Compiled at state as well as All India level
• CPI-rural: Compiled at state as well as All India level
• CPI – combined:
• NSO
• Base year: 2012
• Consumer Expenditure Survey Data by NSSO
• Consumer Food Price Index (CFPI)
• NSO
• Base Year: 2012
• Calculated for Rural, Urban and Combined
• Housing Price measurement:
• RESIDEX:
• National Housing Bank (NHB)
• Smart cities are also covered
• Base year 2017-18
• Housing Price Index:
• Compiled quarterly by RBI
• Ten major cities: (viz., Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi,
Kolkata, Lucknow, and Mumbai).
• Base year: 2010-11
• Cost of Living Index:
• London-based Economist Intelligence Unit (EIU)
• compares prices of more than 200 goods and services in 172 countries
• Baltic Dry Index:
• London based Baltic exchange
• Cost of transporting raw materials via ship
• OBICUS
• The Reserve Bank has been conducting the Order Books, Inventories and
Capacity Utilisation Survey (OBICUS) of the manufacturing sector on a quarterly
basis since 2008.
• Company level data are treated as confidential and never disclosed.
• Core/Underlying Inflation
• Headline Inflation
• Inflation Targeting
• RBI and government jointly decide
• But responsibility to achieve target : RBI
• Philips Curve
Inflation
2011
• 1. Economic growth is usually coupled with
• (a.) Deflation
• (b.) Inflation
• (c.) Stagflation
• (d.) Hyperinflation
•
2011
• 2. A rapid increase in the rate of inflation is sometimes attributed to the
“base effect”. What is “base effect”?
• (a.) It is the impact of drastic deficiency in supply due to failure of crops
• (b.) It is the impact of the surge in demand due to rapid economic growth
• (c.) It is the impact of the price levels of previous year on the calculation of
inflation rate
• (d.) None of the statements (a), (b) and (c) ‘given above is correct in this
context
2013
• 3. Which one of the following is likely to be the most inflationary in
its effect?
• (a) Repayment of public debt
• (b) Borrowing from the public to finance a budget deficit
• (c) Borrowing from banks to finance a budget deficit
• (d) Creating new money to finance a budget deficit
•
2013
4.A rise in general level of prices may be caused by:
1. an increase in the money supply
2. a decrease in the aggregate level of output
3. an increase in the effective demand
•
• Select the correct answer using the codes given below.
• (a) 1 only
• (b) 1 and 2 only
• (c) 2 and 3 only
• (d) 1, 2 and 3
2013
• 5.Consider the following statements :
• Inflation benefits the debtors.
• Inflation benefits the bond-holders.
•
• Which of the statements given above is/are correct?
• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2
•
2015
• 6. Which of the following brings out the ‘Consumer Price Index
Number for Industrial Workers?
• (a) The Reserve Bank of India
• (b) The Department of Economic Affairs
• (c) The Labour Bureau
• (d) The Department of Personnel and Training
2015
• 7. Which reference to inflation in India, which of the following
statements is correct?
• (a) Controlling the inflation in India is the responsibility of the
Government of India only
• (b) The Reserve Bank of India has no role in controlling the inflation
• (c) Decreased money circulation helps in controlling the inflation
• (d) Increased money circulation helps in controlling the inflation
2020
• 8.Consider the following statements
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. The Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing
the key policy rates.
•
• Which of the statements given above is/are correct?
• (a) 1 and 2 only
• (b) 2 only
• (c) 3 only
• (d) 1, 2 and 3
2021
2021
2022
Public finance (Fiscal policy and Budget,
Taxation)
• What is Fiscal Policy:
• It is that part of government policy concerned with raising revenue through
taxation and spending for socio economic development
• Types of Fiscal Policy:
• Contractionary
• Expansionary
Functions of the Government
• Allocation
• Redistribution
• Stabilization
Procyclical vs counter cyclical fiscal policy
Budget In India
Funds in Constitution
• Consolidated Fund Of India
• Public Accounts of India
• Contingency Fund
Government Budgeting
Types of Budget
• Zero Base Budget
• Performance Budget (Outcome Budget)
• Gender Based Budget
• Incremental Budget
Effects of Fiscal Deficit

• Inflation
• Effect on future generation
• BOP crisis
• Crowding out effects
• Fiscal Repression of Financial Institutions
Deficit Financing
• External aid/grants
• External Borrowing
• Internal Borrowing
• Printing new currency
Fiscal Consolidation
• It refers to the policies undertaken by Governments (national and
sub-national levels) to reduce their deficits and accumulation of debt
stock

• Fiscal Slippage:
• Fiscal Glide path
FRBM Act, 2003
Key features of the FRBM Act

The FRBM Act made it mandatory for the government to place the
following along with the Union Budget documents in Parliament annually:

1. Medium Term Fiscal Policy Statement

2. Macroeconomic Framework Statement

3. Fiscal Policy Strategy Statement

The FRBM Act proposed that revenue deficit, fiscal deficit, tax revenue
and the total outstanding liabilities be projected as a percentage of gross
domestic product (GDP) in the medium-term fiscal policy statement.
N K Singh Committee's recommendations were as follows:

Targets:
Debt as the primary target for fiscal policy and that the target must
be achieved by 2023.

Fiscal Council:
Create an autonomous Fiscal Council with a chairperson and two
members appointed by the Centre (not employees of the
government at the time of appointment)

Deviations:
The committee suggested that the grounds for the
government to deviate from the FRBM Act targets should be
clearly specified
Borrowings:
According to the suggestions of the committee, the government must not
borrow from the RBI, except when...

a. the Centre has to meet a temporary shortfall in receipts

b. RBI subscribes to government securities to finance any deviations

c. RBI purchases government securities from the secondary market

NK Singh Committee on FRBM
Current Affairs
• Gross Budgetary support
• The Government's support to the Central plan
• It is earmarked for meeting the planned outlays of the Central government
during the financial year
• includes sources of revenue raised by the Government and tax collection
• fixed by the Finance Commission.
• split into revenue and capital components
FINANCIAL STABILITY AND DEVELOPMENT COUNCIL (FSDC)

• Non-statutory apex level body setup in 2010 on the

recommendations of Raghuram Rajan committee
• Composition:
• Chairman: Union Finance minister.
• Members:
• Heads of Financial Sector Regulators (RBI, SEBI, PFRDA & IRDA) Ø Secretaries of various
Departments
• Chief Economic Adviser
• Minister of state responsible for the Department of Economic Affairs (DEA)
• Chairperson of the Insolvency and Bankruptcy Board of India (IBBI) among others.
India has been placed at 53rd position among 117 nations in
terms of budget transparency and accountability, according to
the Open Budget Survey. The survey, conducted by
International Budget Partnership (IBP), has provided India's
Union Budget process a transparency score of 49 out of 100,
which is higher than the global average of 45.

https://m.economictimes.com/news/politics-and-nation/india-53rd-in-budget-
transparency-accountability-in-ibp-survey/articleshow/75457830.cms
• Extra Budgetary Borrowings:
• Eg: FCI: food coupons
• Ways and Means Advances(WMAs)
• They cannot act as Security and are not tradeable
• Special and Normal WMAs (state government)
• Government Securities:
• Treasury Bills : <1 year
• G-secs: > 1yr (if state govt: state development loans (SDLs))
• Public Debt:
• Govt debt
• Internal debt (38.2%) and external debt (2.9%)
• Internal Debt:
• Marketable debt: 32.9 % (G-secs and T-bills)
• Non-marketable debt: 5.3%
• External Debt:
• External Commercial Borrowings (ECBs)
• NRI deposits
• Bilateral and Multilateral loans
• Trade credit

• Long Term loan forms bulk of external debt

• Public Debt (Centre and States)
• Govt liabilities : debt contracted against CFI (41% of GDP)
• Liabilities in Public Account: Other liabilities (5.5 %)
• Interest payments to revenue receipts (IP-RR ratio)
• Fiscal Drag
• Crowding In
• Crowding out
• Fiscal Performance Index (FPI): CII
• US dollar denominated debt remained the largest component of
India’s external debt, with a share of 52.1 per cent at end-March
2021, followed by the Indian rupee (33.3 per cent), yen (5.8 per
cent), SDR (4.4 per cent) and the euro (3.5 per cent).
• The outstanding debt of both government and non-government
sectors increased
• The share of outstanding debt of non-financial corporations in total
external debt was the highest at 40.4 per cent, followed by deposit-
taking corporations (except the central bank) (28.2 per cent), general
government (18.8 per cent) and other financial corporations
• The instrument-wise classification shows that the loans were the
largest component of external debt, with a share of 34.8 per cent,
followed by currency and deposits (25.2 per cent),
• Debt service (principal repayments plus interest payments) increased
to 8.2 per cent of current receipts

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=5181
9
India’s External Debt as at the end of March 2021
• The external debt to GDP ratio increased to 21.1 per cent at end-March 2021
from 20.6 per cent at end-March 2020.
• Commercial borrowings remained the largest component of external debt,
with a share of 37.4 per cent, followed by non-resident deposits (24.9 per
cent) and short-term trade credit (17.1 per cent).
• The share of short-term debt (with original maturity of up to one year) in
total external debt declined to 17.7 per cent
• Finance Commission:
• A.280
• 15th FC
• 41% of divisible pool of taxes to states
• 1% to security and development of Ladakh and J&K
• Grants from Union to States:
• Local Bodies Grant:
• Rural Bodies: for All 3 tiers and for scheduled and tribal areas
• 50% tied and 50 % untied grants
• Urban local bodies:
• Million plus cities: air quality, water and solid waste management
• Less the 1 million: 50 % tied and 50% untied
• Post Devolution Revenue Deficit Grants
• Disaster Management Grants
• Sector Specific Grants
• Specific Grants to certain states
• Performance based incentives
2011
• 1. Micro finance is the provision of financial services to people of low-income groups. This includes both the consumers and the
self-employed. The service/services rendered under micro-finance is/are:
• 1. Credit facilities
• 2. Savings facilities
• 3. Insurance facilities
• 4. Fund Transfer facilities
•
• Select the correct answer using the codes given below the lists:
• (a) 1 only
• (b) 1 and 4 only
• (c) 2 and 3 only
• (d) 1, 2, 3 and 4
•
2011
• 2. Which one of the following is not a feature of “Value Added Tax”?
• (a.) It is a multi-point destination-based system of taxation
• (b.) It is a tax levied on value addition at each stage of transaction in the
production-distribution chain
• (c.) It is a tax on the final consumption of goods or services and must
ultimately be borne by the consumer
• (d.) It is basically a subject of the Central Government and the State
Governments are only a facilitator for its successful implementation
•
2011
• 3. Which one of the following statements appropriately describes the “fiscal stimulus”?
• (a.) It is a massive investment by the Government in manufacturing sector to ensure the
supply of goods to meet the demand surge caused by rapid economic growth
• (b.) It is an intense affirmative action of the Government to boost economic activity in the
country
• (c.) It is Government’s intensive action on financial institutions to ensure disbursement of
loans to agriculture and allied sectors to promote greater food production and contain
food inflation
• (d.) It is an extreme affirmative action by the Government to pursue its policy of financial
inclusion
•
2013
• 4. In India, deficit financing is used for raising resources for
• (a) economic development
• (b) redemption of public debt
• (c) adjusting the balance of payments
• (d) reducing the foreign debt
•
2014
• 5. The sales tax you pay while purchasing a toothpaste is a
• (a) tax imposed by the Central Government
• (b) tax imposed by the Central Government but collected by the State
Government
• (c) tax imposed by the State Government but collected by the Central
Government.
• (d) tax imposed and collected by the State Government.
2014
• 6. With reference to Union Budget, which of the flowing is / are covered under Non-Plan Expenditure?
• 1. Defence expenditure
• 2. Interest payments
• 3. Salaries and pensions
• 4. Subsidies
•
• Select the correct answer using the code given below.
• (a) 1 only
• (b) 2 and 3 only
• (c) 1, 2, 3 and 4
• (d) None
2015
• 7. There has been a persistent deficit budget year after year. Which action/actions of the following can be
taken by the Government to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty
•
• Select the correct answer using the code given below.
• (a) 1 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1,2,3 and 4
2016
• 8. With reference to ‘Financial Stability and Development Council’, consider the following
statements:
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macro prudential super-vision of the economy.
•
• Which of the statements given above is/are correct?
• (a) 1 and 2 only
• (b) 3 Only
• (c) 2 and 3 only
• (d) 1, 2 and 3
2016
• 9. Which of the following is/are included in the capital budget of the Government of India?
1. Expenditure on acquisition of assets like roads, buildings, machinery, etc.
2. Loans received from foreign governments.
3. Loans and advances granted to the States and Union Territories.
•
• Select the correct answer using the code given below.
• (a) 1 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1, 2 and 3
•
2016
• 10. There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government
to reduce the deficit?
1. Reducing revenue expenditure
2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty
•
• Select the correct answer using the code given below.
• (a) 1 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1,2,3 and 4
•
2017
• 11. Consider the following statements:
1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
•
• Which of the statements given above is/are correct?
• (a) 1 only
• (b) 2 only
• (c) Both 1 and 2
• (d) Neither 1 nor 2
•
2017
• 12. What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?
1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign
exchange reserves.
3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in
the near future.
•
• Select the correct answer using the code given below:
• (a) 1 only
• (b) 2 and 3 only
• (c) 1 and 3 only
• (d) 1, 2 and 3
2017
• 13. With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT
Act)’, consider the following statements:
• 1. A property transaction is not treated as a benami transaction if the owner of the
property is not aware of the transaction.
• 2. Properties held benami are liable for confiscation by the Government.
• 3. The Act provides for three authorities for investigations but does not provide for any
appellate mechanism.
•
• Which of the statements given above is/are correct?
• (a) 1 only
• (b) 2 only
• (c) 1 and 3 only
• (d) 2 and 3 only
2017
• 14. Who among the following can join the National Pension System (NPS)?
• (a) Resident Indian citizens only
• (b) Persons of age from 21 to 55 only
• (c) All State Government employees joining the services after the date of
notification by the respective State Governments
• (d) All Central Government employees including those of Armed Forces
joining the services on or after 1st April, 2004
•
2018
• 15. If a commodity is provided free to the public by the Government,
then
• the opportunity cost is zero.
• the opportunity cost is ignored.
• the opportunity cost is transferred from the consumers of the
product to the tax-paying public.
• the opportunity cost is transferred from the consumers of the
product to the Government.
•
2018
• 16. Consider the following items:
1. Cereal grains hulled
2. Chicken eggs cooked
3. Fish processed and canned
4. Newspapers containing advertising material
•
• Which of the above items is/are exempted under GST (Goods and Services Tax)?
A. 1 only
B. 2 and 3 only
C. 1, 2 and 4 only
D. 1, 2, 3 and 4
•
2018
17.Consider the following statements
1. The Fiscal Responsibility and Budget Management ( FRBM) Review Committee Report has recommended a debt to GDP ratio of
60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State
Governments.
2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the
former owes any outstanding liabilities to the latter.
•
• Which of the statements given above is/are correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
•
2020
• 18. Along with the Budget, the Finance Minister also places other
documents before the Parliament which include ‘The Macro Economic
Framework Statement’. The aforesaid documents is presented because this
is mandated by
• (a) Long standing parliamentary convention
• (b) Article 112 and Article 110(1) of the Constitution of India
• (c) Article 113 of the Constitution of India
• (d) Provisions of Fiscal Responsibility and Budget Management Act, 2003
•