10 Dec 2023 Test Ans

Test 33 - Solution
Q1. Answer: D
Explanation:
• The India-Bhutan border is an open international border of 699 km long separating
the Kingdom of Bhutan from the Republic of India.
• There are 4 Indian states that share their border with Bhutan, namely West Bengal,
Sikkim, Assam, and Arunachal Pradesh.
• Meghalaya forms international boundary only with Bangladesh.
Hence, option D is correct.
Q2. Answer: C
Explanation:
• Project Dantak is an overseas project of the Border Roads Organisation (BRO) under the
Ministry of Defence of India.
• It was established on 24 April 1961 as a result of an agreement between Jigme Dorji
Wangchuck, the third king of Bhutan and then Prime Minister of India Jawahar Lal Nehru.
• It is primarily focused on developing infrastructure and providing connectivity in remote
areas of Bhutan.
• It was tasked to construct the pioneering motorable roads in Bhutan.
Hence, option C is correct.
Q3. Answer: C
Explanation:
Office Complex 6, 3rd Floor, Old Rajinder Nagar New Delhi 110060|
Ph: 08045248491, 7041021151, | Email: students@levelupias.com
• Doklam is an area spread over less than 100 square km comprising a plateau and a valley
at the trijunction between India, Bhutan, and China. The plateau is claimed by China. It
lies to the north-east of Siliguri Corridor.
• It is surrounded by the Chumbi Valley of Tibet, Bhutan’s Ha Valley and Sikkim.
Q4. Answer: C
Explanation:
• Pair 1 is correctly matched: The Indian Navy has launched the 'Operation Vanilla' to assist
the population of Madagascar affected by Cyclone Diane.
• Pair 2 is correctly matched: Operation Ajay was launched by Indian Government to
evacuate Indian nationals from Israel-Hamas conflict zone.
• Pair 3 is correctly matched: Operation All Clear was a military operation conducted by
Royal Bhutan Army forces against Assam separatist insurgent groups in the southern
regions of Bhutan between 15 December 2003 and 3 January 2004. It was the first
operation ever conducted by the Royal Bhutan Army.
Q5. Answer: D
Explanation:
• Pair 1 is correctly matched: Nagorno-Karabakh is a landlocked mountainous area in the
Caucasus region, disputed between Armenia and Azerbaijan.
• Pair 2 is correctly matched: Dramana and Shakhaote, Sinchulungpa and Langmarpo
valley, Yak chu and Charithang valleys and the Doklam region are the regions of dispute
between China and Bhutan.
• Pair 3 is correctly matched: Kuril Islands are a set of four islands situated between the
Sea of Okhotsk and the Pacific Ocean. Japan refers to them as Northern
territories; Russia calls them- Kuril Islands.
Q6. Answer: B
Explanation:
• Statement 1 is incorrect: CTBT is a multilateral treaty by which states agree to ban all
nuclear explosions in all environments, for military or civilian purposes.
• Statement 2 is correct: It was adopted by the United Nations General Assembly in 1996,
it’s still in the ratification stage — 18 countries are yet to ratify.
• Statement 3 is correct: The Preparatory Commission for the Comprehensive Nuclear-Test-
Ban Treaty Organization (CTBTO) was set up in 1996 with its headquarters in Vienna,
Austria.
Hence, option B is correct.
Q7. Answer: B
Explanation:
• Vienna Convention of 1961 is an international treaty that defines the framework for
diplomatic relations between independent countries.
• It specified the privileges of a diplomatic mission that enable diplomats to perform their
functions without fear of coercion or harassment by the host country.
• It forms the legal basis of diplomatic immunity.
• Its articles are considered cornerstone of modern international relations.
Q8. Answer: D
Explanation:
• The Five Eyes is an intelligence alliance comprising nations including Australia, Canada,
New Zealand, the United Kingdom and the US.
• These countries are parties to the multilateral UK-USA Agreement, a treaty for joint
cooperation in signals intelligence.
• The alliance’s origins can be traced back to the Second World War. The UK and the US
decided to share intelligence after successfully breaking German and Japanese codes,
respectively.
Q9. Answer: B
Explanation:
• The UN Security Council is one of the UN’s 6 main organs. The UNSC has 15
members consisting of permanent and non-permanent members.
• Statement 1 is incorrect: The 10 elected or non-permanent members have tenure of two
years.
• Statement 2 is correct: Permanent 5 members are US, UK, Russia, China, and France. All
permanent members have veto power whereas all the members have one vote. To
decide on any matter in the UNSC, 9 votes out of 15 are required.
• Statement 3 is correct: It was formed immediately after World War 2 with the prime
responsibility of maintaining international peace and security.
Q10. Answer: A
Explanation:
All four mentioned groups are favoring reforms in UNSC.
• G-4 countries (Germany, Japan, Brazil, and India) are bidding for permanent membership
of UNSC.
• Coffee Club consists of Italy, Spain, Argentina, Canada, Mexico, South Korea and
Pakistan; favors expansion of the non-permanent seats with regional representation.
• L69 Group is a group of developing countries from Africa, Latin America and the
Caribbean, Asia and Pacific. They form a major bloc demanding comprehensive reform of
the UNSC by expanding both permanent and non-permanent seats.
• Africa Group demands two permanent seats, because of historical injustices.
Hence, option A is correct.
Q11. Answer: A
Explanation:
• Statement 1 is correct: India, till now has been elected for eight terms (1950-51, 1967-68,
1972-73, 1977-78, 1984-85, 1991-92, 2011-12, 2021-22) as a non-permanent member of
UNSC.
• Statement 2 is incorrect: India is not a member of the Coffee Club/ Uniting for Consensus
(UFC) group. Italy, Spain, Argentina, Canada, Mexico, South Korea and Pakistan are part
of Coffee Club, opposing G-4 becoming permanent members with a veto power.
Q12. Answer: A
Explanation:
• Statement 1 is incorrect: Bhutan's largest trading partners are India (accounting for
around 90% of exports and 80% of
imports), followed by Bangladesh and
China.
• Statement 2 is incorrect: In the recent
developments in bilateral cooperation,
decision was made to go ahead with
the final survey for the 58 km cross-
border rail link between Gelephu and
Kokrajhar in Assam to be built by India.
• Statement 3 is correct: India has
constructed three Hydroelectric
Projects (HEPs) in Bhutan i.e. Chukha,
Kurichhu and Tala HEP. Both sides are in process of expediting the completion of other
ongoing projects including the 1020 MW Punatsangchhu-2.
Q13. Answer: B
Explanation:
• Statement 1 is correct: Gulf of Mannar and Palk Strait separate Sri Lanka from India.
These two bodies of water are geographically situated between the two nations, acting as
a natural maritime border.
• Statement 2 is incorrect: While Sri Lanka does share maritime borders with Maldives and
India, it does not have one with Indonesia. Indonesia is geographically separated from
Sri Lanka by the vast Indian Ocean, and their exclusive economic zones do not intersect.
• Statement 3 is correct: Colombo is the largest city of Sri Lanka. Colombo holds the
distinction of being the most populous city in Sri Lanka, serving as both the commercial
and financial hub of the nation.
Q14. Answer: C
Explanation:
The correct order from North to South is:
• Trincomalee Port
• Oluvil Port
• Colombo Port
• Hambantota Port
Q15. Answer: B
Explanation:
• Statement 1 is correct: India-Sri Lanka relations are more than 2,500 years old and are
built upon, geographical, historical, cultural, economic and religious factors. Bilateral
relations have traditionally been good. The year 2023 is particularly significant in India-
Sri Lanka relations as it marks 75 years of diplomatic relations between the two
countries and 200 years of the arrival of Tamil community in SL.
• Statement 2 is correct: Both ethnic groups of Sri Lanka (Sinhalese Buddhist and Tamils)
have origins in India.
• Statement 3 is incorrect: Sinhalese Buddhist who constitutes 80% of the population
claim to have come from Orissa in the 5th century BCE. Tamils are the other ethnic group
who constitute 20% of the population.
Q16. Answer: D
Explanation:
• The primary reason for India's extensive development cooperation with Sri Lanka is often
associated with the goal of promoting regional stability and security in South Asia.
• India seeks to foster good relations with its neighboring countries, contributing to stability
and prosperity in the region.
• Economic cooperation and developmental assistance are often utilized as tools to
strengthen ties and enhance stability in the area.
Q17. Answer: C
Explanation:
India has collaborated with Sri Lanka on various connectivity initiatives like:
• Land bridge: A feasibility study for a land bridge between Tamilnadu and Sri Lanka is
underway.
• Petroleum pipeline: India and Sri Lanka have discussed the possibility of a petroleum
pipeline for energy connectivity.
• Maritime connectivity: India and Sri Lanka have signed agreements for maritime
connectivity, including a ferry service between Nagapattinam and Kankesanthurai.
• There has been no significant collaboration between the two countries specifically on
developing space technology. While India has its own space program and expertise, it
hasn't directly involved Sri Lanka in any major projects.
Q18. Answer: A
Explanation:
• Yuan Wang-5 belongs to the Yuan Wang class of Chinese vessels. These vessels are
specifically designed for tracking and monitoring satellites, missiles, and other
spacecraft. Due to their capabilities, they are often referred to as "spy ships" by news
outlets and analysts. Their presence near sensitive areas or their movements often raise
concerns about espionage and surveillance.
Q19. Answer: D
Explanation:
• Statement 1 is correct: China's growing economic and political influence in Sri Lanka is
a significant concern for India. China has invested heavily in infrastructure projects in Sri
Lanka and has provided significant loans to the Sri Lankan government. This has raised
concerns in India that China may be attempting to gain a foothold in the region and
challenge India's traditional dominance.
• Statement 2 is incorrect: H-1B visa issue is more of a concern between India and the
United States, not specifically between India and Sri Lanka.
• Statement 3 is correct: The Tamil issue in Sri Lanka has long been a source of tension
between the two countries. India is home to a large Tamil population, and many Indians
are sympathetic to the plight of the Tamils in Sri Lanka. India has been a vocal advocate
for the rights of the Tamils and has called for a political solution to the Tamil issue.
• Statement 4 is correct: There have been frequent clashes between Indian and Sri Lankan
fishermen over fishing rights in the Palk Strait and the Gulf of Mannar. The two countries
have also disputed ownership of Kachathivu Island, which lies at the center of the Palk
Strait.
• Statement 5 is incorrect: The Indo-Sri Lanka Free Trade Agreement (ISFTA) entered into
force with effect from 1st March, 2000. The ISFTA is now in full implementation as both
sides have completed their phasing out commitments under the respective Tariff
Liberalization Program (TLP).
Q20. Answer: C
Explanation:
• Statement 1 is correct: The Paris Club is an informal group of official creditors, mainly
Western nations, that work together to find sustainable solutions to the payment
difficulties of debtor countries. It was formed in 1956 and is headquartered in Paris,
France.
• Statement 2 is correct: There are 22 members to this grouping and all of them are
members of OECD.
o The Members are: Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Ireland, Israel, Japan, Netherlands, Norway, Russia, South Korea, Spain,
Sweden, Switzerland, the United Kingdom and the United States.
• Statement 3 is correct: Both Russia and the USA are members of the Paris Club.
Q21. Answer: C
Explanation:
• At the time of formulation of the 2nd Five-year plan, the Mahalanobis model, developed
by P.C. Mahalanobis, was a two-sector model that emphasized the development of heavy
industries as the key driver of economic growth.
• The model argued that by investing in heavy industries, India could produce the capital
goods needed to further industrialize, ultimately reducing its dependence on imports
and promoting self-sufficiency.
• This approach contrasted with prioritizing consumer goods or agriculture, as it aimed to
build a strong foundation for future economic diversification and expansion.
Q22. Answer: B
Explanation:
The concept of the "Commanding Heights" of the economy aligns most closely with the
Socialist economic philosophy. It refers to key sectors or industries that are considered vital
for the nation's economic stability and growth, often under public or government control
in a socialist framework.
The Economic Model of India assigned a pivotal role to its public sector, which came to
control "commanding heights" of the economy after the Indian parliament adopted a
resolution in 1956 to achieve a "socialistic pattern of society" as a national goal. In
pursuance to this goal, a large number of public sector units (PSUs) were set up in different
sectors of the economy.
The expansion of the public sector did not take place only in a traditional direction i.e.
(correct provision of public goods and infrastructure), but also to non-traditional command
over the economy, in particular:
• Nationalization to occupy the "commanding heights" of the economy and regulations to
protect them from internal and foreign competition
• Widespread subsidies, explicit and implicit
• Administered prices and related regulations
Q23. Answer: B
Explanation:
• Statement 1 is incorrect: While there was a role for the private sector, the broad
consensus favored a ‘Mixed economy’ with a strong role for the state in guiding and
directing economic development. Also, the Private sector was at an infant stage and
could not tackle the core developmental issues. So, state must take complete
responsibility for development.
• Statement 2 is correct: While foreign investments were not entirely banned, they were
viewed with caution due to the colonial drain theory as popularized by Dadabhai
Naoroji. Also, In the early years after independence, there was a focus on self-reliance in
various sectors.
• Statement 3 is correct: There was indeed a consensus among policymakers that economic
development in India should be planned, leading to the adoption of Five-Year Plans to
guide and regulate the country's economic growth.
Q24. Answer: B
Explanation:
• Statement 1 is incorrect: The First Five-Year Plan was primarily based on the Harrod-
Domar model. The Plan focused mainly on the development of the primary sector.
• Statement 2 is correct: The First Five-Year Plan saw the establishment of the first Indian
Institute of Technology (IIT) in Kharagpur in 1951. It recognized the importance of
technical education for industrial development and actively promoted the creation of
these prestigious institutions.
• Statement 3 is correct: Towards the end of First five-year plan, University Grants
Commission (UGC) was established in 1956 to take care of funding and to take measures
to strengthen the higher education in the country.
Q25. Answer: C
Explanation:
• The Fifth Five-Year Plan (1974-1979) was the first plan to explicitly and prominently
feature the slogan "Garibi Hatao" (removal of poverty) as its foremost objective.
• This plan aimed to address poverty through a variety of measures, including employment
generation, rural development, and social welfare programs.
Q26. Answer: D
Explanation:
Indicative Planning: Market and State in Harmony
Indicative planning is an economic approach where the government plays a guiding role in
steering the economy towards desired goals, while still leaving significant room for private
enterprise and market forces. This form of planning allows the private sector to operate
within guidelines or broad objectives set by the government while maintaining a significant
level of autonomy and decision-making within the economy.
Additional Info:
Types of Planning:
• Imperative Planning: Full state control; target-based with no market role.
• Democratic Planning: Led by elected representatives.
•Normative Planning: Bottom-up; respects local customs in planning.
• Financial Planning: Estimate and allocate resources in monetary terms.
• Rolling/Continuous Planning: Prepares medium-term plans with assessments of previous
plans.
Q27. Answer: B
Explanation:
• Statement 1 is correct: Historically, the agriculture sector has indeed employed the
largest number of workers in India, although this proportion has been decreasing
gradually over time.
• Statement 2 is incorrect: In the Indian economic growth story, the services sector has
actually been a notable contributor to growth and has consistently grown faster than
the agriculture and manufacturing sector. In recent decades, it has become the biggest
contributor to India's GDP.
• Statement 3 is correct: The services sector has surpassed both agriculture and
manufacturing to become the largest contributor to India's GDP. This is a noteworthy
phenomenon, as it deviates from the traditional pattern of economic development, where
industrialization precedes the growth of the services sector.
Q28. Answer: D
Explanation:
• Pair 1 is incorrect: People’s plan was prepared by the late M.N. Roy (a 10-year plan). Its
chief emphasis was on agricultural and consumer goods industries through collectivization
and setting up of state-owned industrialization.
• Pair 2 is incorrect: Sarvodaya Plan (1950) was drafted by Jaiprakash Narayan. This plan
itself was inspired by Gandhian Plan and Sarvodaya Idea of Vinoba Bhave. This plan
emphasized on agriculture and small & cottage industries. It also suggested the freedom
from foreign technology and stressed upon land reforms and decentralized participatory
planning.
• Pair 3 is incorrect: This plan was drafted by Sriman Narayan Agarwal, principal of Wardha
Commercial College. It emphasized the economic decentralization with primacy to rural
development by developing the cottage industries.
Q29. Answer: A
Explanation:
• Statement 1 is correct: The Ninth Five-Year Plan (1997-2002) explicitly aimed to achieve
economic growth alongside social justice and equality. This was a significant shift from
previous plans, which had primarily focused on economic growth without explicitly
addressing social issues.
• Statement 2 is incorrect: It aimed to depend predominantly on the private sector –
Indian, as well as foreign (FDI) and the state was envisaged to increasingly play the role
of facilitator and increasingly involve itself with social sector, viz., education, health etc.,
and infrastructure where private sector participation was likely to be limited.
Q30. Answer: B
Explanation:
• Statement 1 is incorrect: Unlike the Planning Commission, NITI Aayog does not have the
authority to decide on the quantum of grants to be allocated to the states. The power to
decide on the quantum of grants to states for various schemes lies with the Ministry of
Finance.
• Statement 2 is correct: NITI Aayog is a think-tank entrusted with analyzing public data,
conducting research, and formulating policy recommendations for states. This helps
states in informed decision-making and better governance.
Q31. Answer: C
Explanation:
The Objectives of Planning are:
• Fostering Economic Growth
• Achieving Self-Reliance and Sufficiency (e.g., addressing food scarcity and building a
robust industrial base)
• Minimizing Unemployment (e.g., targeting high illiteracy and skill deficits)
• Ensuring Social Justice (e.g., eliminating poverty and reducing income inequalities)
• Facilitating Modernization
• Promoting Inclusive and Sustainable Economic Growth
Q32. Answer: C
Explanation:
• Statement 1 is correct: The average annual growth rate of the Indian economy between
1950 and 1990 was around 3.5%, which falls below the 4% mark. This was at a time when
the developing world, including Sub-Saharan Africa and other least developed countries,
showed a growth rate of 5.2 % per annum.
• Statement 2 is correct: While the public sector was expected to be a source of investment
funds, it often became a net borrower due to factors like inefficiencies, overambitious
projects, and subsidies. By then, the government began to borrow not only to meet its
own revenue expenditure but also to finance public sector deficits and investments.
During 1960-1975, total public sector borrowings averaged 4.4 % of GDP. These
increased to 6 % of GDP by 1980-81, and further to 9 % by 1989-90.
Q33. Answer: A
Explanation:
• Foreign exchange reserves in the late 1980s declined to a level that was not adequate to
finance imports for more than two weeks. There was also not sufficient foreign exchange
to pay the interest that needs to be paid to international lenders. Therefore, a BoP crisis
was looming to avert which India resorted to the help of WB and IMF.
• Other objectives of the policy were to tackle high inflation, mismanagement of the
economy, revive growth prospects etc. However, the most appropriate reason is to avert
a BoP crisis. The NEP aimed towards creating a more competitive environment in the
economy and removing the barriers to entry and growth of firms. It can broadly be
classified into two groups: the stabilization measures and the structural reform measures.
Q34. Answer: C
Explanation:
• Statement 1 is correct: Prior to 1991, India's trade policy was heavily protectionist. The
government used import quotas and licenses to restrict imports and imposed high tariffs
on imported goods. This aimed to shield domestic industries from foreign competition
and encourage import substitution.
• Statement 2 is correct: Tariffs raise the prices of imported goods by adding an additional
cost on top of their original price. This makes them more expensive compared to
domestically produced goods, discouraging consumers from buying them.
Q35. Answer: B
Explanation:
• Statement 1 is correct: The Tenth Five-Year Plan (2002-2007) placed a strong emphasis
on human development, setting specific targets for areas like literacy, healthcare, and
poverty reduction. This reflected a growing recognition of the importance of social
development alongside economic growth.
• Statement 2 is incorrect: Agriculture was declared as the prime moving force of the
economy
• Statement 3 is correct: It intended to decentralize planning by increasing the role of
states and local bodies, including Panchayati Raj Institutions, in decision-making and
implementation. This aimed to enhance responsiveness to local needs and promote
bottom-up development.
Q36. Answer: C
Explanation:
• Statement 1 is incorrect: The New Economic Policy of 1991 aimed to liberalize the
economy, which involved abolishing the licensing system in many sectors. This
deregulation allowed individuals to start industrial activities without needing
government permission, promoting entrepreneurship and competition.
• Statement 2 is correct: The policy actively encouraged private sector participation in
areas previously dominated by the public sector, like telecommunications, airlines, and
power generation. This aimed to improve efficiency, attract foreign investment, and
promote economic growth.
• Statement 3 is correct: Direct tax rates were rationalized with a three-slab structure
during the economic reforms, with the peak rate being 30% in 1997. Since 1991, there
has been a reduction in the taxes on individual incomes as it was felt that high rates of
income tax were an important reason for tax evasion.
• Statement 4 is incorrect: The rupee was devalued against foreign currencies as part of
the economic reforms to enhance export competitiveness.
Q37. Answer: A
Explanation:
• Statement A is correct: The first five-year plan was Growth-Based which followed the
trickle-down approach for planned development. It meant for fast paced industrial
development and transformation of agriculture in select regions which would spread to
the underdeveloped regions and the more backward sections of the community through
trickle-down effect. This was the major focus of planning in the 1950s and early 1960s.
• Statement B is incorrect: Beginning of Growth Oriented Approach was started in first
plan and was the major focus of planning in the 1950s and early 1960s. Therefore, it was
not a new approach in policies and programmes post-1991 reforms.
• Statement c is incorrect: The inequalities caused by initial plans and disparities
exacerbated by Green Revolution were tried to be addressed by Third Five Year Plan
(1961-66) (not the fifth 5-year plan). Third plan focused on Incomes and employment
generation through the creation of additional assets and by means of work generation
programs.
• Statement D is incorrect: Fifth Five Year Plan (FYP) witnessed the beginning of the
provision for basic amenities approach. Fifth plan ensured provision for the basic
amenities to the people is the approach to address poverty in India. For Example, Public
Distribution System (PDS), Free Education etc.
Q38. Answer: B
Explanation:
• Traditionally, economic development follows a pattern where the agricultural sector
gradually shrinks, the manufacturing sector grows rapidly, and the services sector
eventually expands. However, in India, the services sector has defied this pattern by
growing faster than both agriculture and manufacturing, becoming the largest
contributor to the GDP. This is unusual because it represents a deviation from the typical
development trajectory observed in other countries.
• But by 1990 the share of the service sector was 40.59 per cent, more than that of
agriculture or industry, like what we find in developed nations. This phenomenon of
growing share of the service sector was accelerated in the post 1991 period.
Q39. Answer: D
Explanation:
• Statement 1 is incorrect: The 11th Plan (2007-2012) was aimed at “Towards Faster and
More Inclusive Growth”.
• Statement 2 is incorrect: The 11th Plan started well with the first year, achieving a growth
rate of 9.3%, however, the growth decelerated to 6.7% rate in 2008-09 following the
global financial crisis. The economy recovered substantially to register growth rates of
8.6% and 9.3% in 2009-10 and 2010-11, respectively
Q40. Answer: C
Explanation:
Economic Reforms in India
• Statement 1 is correct: Economic reforms in India have generally led to increased
income and quality of consumption for many segments of the population. This is due to
factors such as economic growth, increased job opportunities, and improved access to
goods and services.
• Statement 2 is correct: However, these reforms have also been criticized for
exacerbating existing inequalities in Indian society. The benefits of economic growth
have not been equally distributed, and some groups have been left behind. This has led
to a widening gap between the rich and the poor.
Q41. Answer: C
Explanation:
Structural reforms address the fundamental weaknesses of an economy. For e.g. an
economy might have too much state control. So, easing government regulation and
promoting ease of doing business may be a structural reform.
Some other such structural reforms can be:
• Attempting higher participation of private capital—Indian and foreign.
• Increasing aggregate supply in the economy by addressing supply side issues.
• Improving administration of Subsidies.
• Investment Infrastructure, for e.g. addressing power sector woes in India.
• Fiscal Consolidation and Financial Inclusion.
Q42. Answer: A
Explanation:
• Statement 1 is correct: Due to the availability of a large pool of skilled and cost-effective
labor, making it a desirable location for companies seeking to outsource services or
expand their operations. The availability of this labor force significantly contributed to the
growth of the services sector.
• Statement 2 is incorrect: The economic reforms of 1991 aimed to liberalize the economy,
which involved reducing import controls and tariffs. Lower trade barriers actually
facilitated the growth of the services sector by opening up new markets and facilitating
the flow of goods and services.
• Statement 3 is correct: Devaluation of rupee against foreign currencies led to increase
in the flow of foreign exchange which incentivized many foreign companies to invest in
India and thus contributed to the high growth of services sector post reform period.
• Statement 4 is correct: Globalization and technological advancements led to a high
demand for services like IT, finance, and healthcare in international markets. India, with
its skilled labor force and competitive costs, was able to capitalize on this demand and
become a major exporter of services.
Q43. Answer: B
Explanation:
In NITI Aayog’s paper “Changing Structure of Rural Economy of India Implications for
Employment and Growth 2017”, following observations were made:
Statement 1 is incorrect: The absolute level of income per worker i.e. worker productivity
has increased for both rural and urban areas. For rural areas it was Rs. 37273 in 2004 -05 and
Rs. 101755 in 2011 -12, while for urban areas it was Rs. 120419 in 2004 -05 and Rs. 282515 in
2011 -12.
Statement 2 is incorrect: As per 2011 Census, 68.8% of India’s population and 72.4% of
workforce resided in rural areas. However, steady transition to urbanization over the years
has led to a decline in the rural share in the workforce, from 77.8% in 1993 -94 to 70.9% in
2011 -12.
Statement 3 is correct: About two third of rural income is now generated in non-agricultural
activities. Non-farm economy has increased in rural areas. The share of agriculture in rural
economy has decreased from 57% in 1993 -94 to 39% in 2011 -12.
Statement 4 is correct: After 2004 -05, the rural areas have witnessed negative growth in
employment inspite of high growth in output. The growth rate of rural employment was
1.45% during 1994 -2005, which fell to -0.28% between 2005 -12.
Q44. Answer: B
Explanation:
• Statement 1 is incorrect: While there has been some growth in agriculture, the share of
agriculture in India's GDP has actually decreased significantly since 1991. Agriculture
contributes only about 15 percent (2018) to the GDP, down from 28 percent in 1991.
• Statement 2 is correct: After the liberalization of the economy, India's exports have
grown significantly, increasing its share in world trade. This is due to factors like
globalization, reduced trade barriers, and the emergence of India as a major exporter of
IT and other services.
• Statement 3 is correct: Foreign Direct Investment (FDI) inflows increased dramatically
after 1991 due to the opening up of the Indian economy and the government's efforts to
attract foreign investment.
• Statement 4 is correct: India's foreign exchange reserves have increased significantly
since 1991 due to increased exports, FDI inflows, and remittances from overseas
Indians. This has helped to stabilize the Indian rupee and improve the country's
creditworthiness.
Q45. Answer: B
Explanation:
• Statement 1 is correct: The Eighth Five-Year Plan (1992-1997) was launched amidst a
challenging economic environment with a volatile political climate and a deteriorating
BoP situation. This context had a significant impact on the plan's priorities and challenges.
o It was postponed by two years because of political uncertainty at the Centre. Worsening
Balance of Payments position, rising debt burden, widening budget deficits, recession in
industry etc.
• Statement 2 is correct: Rapid economic growth (highest annual growth rate so far –
6.8%), growth in exports and imports and improvement in trade and current account
deficit etc., were achieved even though the share of public sector in total investment had
declined considerably to about 34%.
• Statement 3 is incorrect: The Eighth Five-Year Plan aimed to reduce the role of the public
sector and encourage greater private sector participation in the economy. This included
initiatives like liberalization and privatization. Share of public sector in total investment
had declined considerably to about 34 %.
Q46. Answer: A
Explanation:
• Statement 1 is correct: India's economic growth has always been positive since the LPG
reforms of 1991, except for the FY 2020-21 due to the COVID-19 pandemic and the
subsequent lockdown.
• Statement 2 is incorrect: India's economic growth rate has not always been increasing.
There have been periods of slower growth or even stagnation despite the overall
positive trend. For example, there was a slowdown in the late 1990s and again in the early
2010s.
Q47. Answer: B
Explanation:
Initiatives of NITI Aayog:
• Ek Bharat Shrestha Bharat (EBSB) is a national initiative launched by the Government of
India in 2015 to promote cultural exchange and national unity between different states
and territories in India. EBSB is under NITI Aayog.
• Aspirational Districts Program (ADP) is a flagship program launched by the Government
of India in 2018 to rapidly transform 112 most backward districts across the country. ADP
is also under NITI Aayog.
• Atal Innovation Mission (AIM) is a flagship initiative launched by the Government of India
in 2018 to promote innovation and entrepreneurship in the country. AIM is also under
NITI Aayog.
• Sustainable Action for Transforming Human Capital (SATH): NITI Aayog aims to transform
education and health in states through the Sustainable Action for Transforming Human
Capital initiative, offering guidance and support.
• SAMAVESH: Launched as a major initiative, SAMAVESH focuses on networking and
partnering with knowledge and research institutions through a hub-and-spoke model.
• Production Linked Incentive (PLI) Scheme: NITI Aayog, in collaboration with ministries
and departments, facilitated the introduction of a five-year Production Linked Incentive
Scheme in key sectors.
Q48. Answer: C
Explanation:
• Statement 1 is correct: Fostering cooperative federalism is a core function of NITI Aayog.
It aims to create a system where the national and state governments work together in
harmony and coordination for the development of the country.
• Statement 2 is correct: NITI Aayog serves as a platform for the resolution of inter-
sectoral and inter-departmental issues. It brings together various stakeholders from
different sectors and departments to discuss and resolve issues that hinder development.
• Statement 3 is incorrect: NITI Aayog does not have the authority to impose policies on
states for approved projects. While it can recommend policies and projects, the final
decision on implementation rests with the states.
• Statement 4 is correct: NITI Aayog actively seeks to bring outside ideas into policy-
making. It encourages the involvement of experts, think tanks, and civil society
organizations in the policy-making process.
Q49. Answer: D
Explanation:
Positive impact of Economic liberalization in India:
• Higher GDP Growth: The rate of GDP growth increased significantly, rising from 3.4% in
the 1960s and 1970s and 5.2% in the 1980s to 5.9% in the 1990s and further to 7.6% in
the first decade of the 21st century.
• Economic Growth Rate: India’s economic growth between 1992 – 2000 was 5.7%, much
higher than the GDP growth rates of previous years.
• Increased Investment: Investment, including Foreign Direct Investments (FDIs) and
Foreign Institutional Investments (FIIs), increased after liberalization.
• Service Sector Growth: New sectors like Business Process Outsourcing (BPO), Information
Technology (IT), etc., flourished in India, leading to increased service exports and job
creation.
• Expansion of Private Sector: Privatization of many Public Sector Undertakings (PSUs) and
deregulation of various sectors paved the way for industries to thrive, fostering economic
growth.
• Improved Quality of Goods and Services: Liberalization and globalization forced Indian
industries to compete with foreign countries, leading to improved quality of goods and
services, enhancing competitiveness.
• Lower Inflationary Pressure: Removal of inefficiencies and increased competition
resulted in a reduction in inflationary pressure on the economy.
• Reduction in Poverty: India's per capita GDP ranking improved significantly, moving from
93rd (out of 109 countries) in the mid-1970s to 58th in 2004, indicating a reduction in
poverty and improvement in economic standing.
Q50. Answer: A
Explanation:
• High levels of internal and external debt were indeed a significant factor in the economic
crisis of the early 1990s in India. By 1991, India's foreign exchange reserves had
plummeted to a mere two weeks' worth of imports, threatening its ability to meet
essential import needs. This situation arose due to a combination of factors, including:
o High fiscal deficit: The government's spending exceeded its income for a prolonged
period, leading to a continuous need for borrowing.
o Large current account deficit: This meant that India was importing much more than it was
exporting, further widening the gap between foreign exchange inflows and outflows.
o Gulf War: The surge in oil prices triggered by the Gulf War significantly increased India's
import bill, further straining its financial resources.
• The government's handling of the fiscal situation was certainly imprudent. The high
fiscal deficit and large current account deficit resulted in excessive borrowing, both
domestically and internationally. This borrowing, in turn, contributed to the buildup of
internal and external debt.

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Test 33 - Solution

Hence, option D is correct.

Hence, option C is correct.

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