Indian Economy: UPSC Previous Year Questions (Prelims)

Explanation

Option (b) is correct: According to United Nations Population Fund (UNFPA), demographic dividend means, "the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-work-ing-age share of the population (14 and younger, and 65 and older)".

Explanation

Closed Economy Does not have economic relations with the rest of the world. Activities taking place outside the territory do not affect the economic activities. There is no difference b/w national income and domestic income. It is an imaginary economy. A closed economy is completely self-sufficient, which means that no imports enter and no exports leave the country. Open Economy An open economy has economic relations with other countries. Economic activities of such an economy are affected by international fluctuations. The size of national income may be greater or smaller than the domestic income. It is a realistic economy. Eg: USA, Singapore, Finland, etc.

Explanation

Statement 1 is incorrect: According to World Bank data, India’s nominal GDP grew significantly between 2000 and 2010. In 2000, India’s nominal GDP was around $468.4 billion, and by 2010, it had crossed $1.7 trillion, reflecting an increase of approximately 2.5 to 3 times. While this reflects robust and steady economic expansion, it falls short of the fourfold increase claimed in the statement. Over the last decade from 2014 to 2024, India’s Gross Domestic Product (GDP) witnessed substantial growth, rising from around $2 trillion in 2014 to approximately $3.7 trillion in 2023, reflecting an increase of $1.7 trillion during this period.

Statement 2 is correct: In the early 1990s, the public sector contributed significantly to India’s GDP, accounting for around 25-30% of the total GDP. By 2010, following economic liberalization and reforms that encouraged private sector growth, the public sector’s share had declined to around 20-22%. Between 2014 and 2024, the public sector’s share in India’s GDP declined from around 20-22% to approximately 15-17% (RBI, Economic Survey). This reduction is driven by aggressive disinvestment, privatization of PSUs like Air India, and a policy shift favoring private sector growth in non-strategic sectors.

Explanation

The Eighth Five-Year Plan (1992-1997) marked a shift in India’s industrialization strategy by emphasizing infrastructure development and liberalization policies over traditional heavy industries. This change stemmed from the economic reforms of 1991, which aimed to boost private sector participation, attract foreign investment, and focus on services and technology-driven industries. This shift had significant implications, including the modernization of infrastructure, which improved connectivity and efficiency, and the expansion of the private sector, which became a key driver of economic growth and employment opportunities.

Explanation

As per Article 281 of the Indian Constitution, the President of India is responsible for causing the recommendations of the Finance Commission to be laid before both Houses of Parliament, along with an explanatory memorandum on the action taken on its recommendations. Options (b), (c), and (d) are incorrect:

The Speaker of Lok Sabha oversees parliamentary proceedings but does not deal with Finance Commission recommendations. The Prime Minister and Union Finance Minister play roles in policy and implementation but do not have the constitutional responsibility mentioned under Article 281.

Explanation

Strengthening of capital markets was not a core focus of the Eleventh Five-Year Plan (2007-2012). The plan emphasized inclusive growth, focusing on poverty reduction, employment generation, gender equality, education, and health.

Explanation

The India-based Neutrino Observatory (INO) was designated as a mega science project in the 11th Five-Year Plan to promote research in high-energy physics.

Option (d) is correct: Neutrinos are subatomic particles that play a key role in understanding the fundamental forces of nature. Despite their elusive nature and weak interactions, they are essential to various processes in the universe, such as stellar re-actions and cosmic phenomena. Neutrinos are chargeless elementary particles that travel near the speed of light, making them difficult to detect. Neutrinos are produced in nuclear reactions, such as beta decay, which occurs in stars, nuclear reactors, and radioactive decay processes. In beta decay, a neutron decays into a proton, emitting a beta particle (electron) and a neutrino. Neutrinos have negligible but non-zero mass, confirmed through experiments in neutrino oscillation in particle physics. Neutrinos are incredibly abundant in the universe. It is estimated that trillions of neutrinos pass through the human body every second, and they are virtually undetectable because they interact very weakly with matter.

Explanation

Statement 1 is correct: The Sugarcane price in India is determined by statutory provisions of the Sugarcane (Con-tro) Order, 1966 issued under the Essential Commodities Act (ECA), 1955. Until 2009, the Union Government fixed the Statutory Minimum Price (SMP) for sugarcane under the Sugarcane (Control) Order, 1966. However, from the 2009-10 sugar season onwards, the SMP was replaced by the Fair and Remunerative Price (FRP), which continues to be fixed by the Union Government based on recommendations of the Commission for Agricultural Costs and Prices (CACP). FRP is the minimum price that is determined by the government of India on the recommendation of CACP.

Statement 2 is correct: Both sugar and sugarcane are classified as essential commodities under the Essential Commodities Act, 1955, which allows the government to regulate their production, supply, and distribution to ensure availability and control prices.

Explanation

A Limited Liability Partnership (LLP) is a hybrid business structure that combines the features of a partnership and a corporation.

Option (a) is correct: There is no upper limit on the number of partners in an LLP. It is a feature of traditional partnerships under the Indian Partnership Act, 1932, where the maximum number of partners is limited to 50 for certain businesses.

Option (b), (c) and (d) are incorrect:

In an LLP, partners can directly manage the business and there is no requirement for a separation between ownership and management. This is a key feature of LLPs. The internal governance of an LLP including the rights and duties of partners, can be decided by mutual agreement among the partners. This flexibility is a characteristic feature of LLPs. An LLP is a corporate body with a separate legal entity, and it enjoys perpetual succession, meaning the LLP continues to exist even if the partners change or leave.

Explanation

Option (b) is correct: The Forward Markets Commission (FMC) was the regulatory authority for commodity futures markets in India. It was responsible for overseeing trading in commodity futures, including the regulation of commodity exchanges like NCDEX and MCX. In 2015, the FMC was merged with SEBI to create a unified regulator for both commodities and securities markets. So, if this question were about the present day, SEBI would be the correct answer for regulating commodities futures trading! Options (a), (c) and (d) are incorrect: Currency Futures Trading and Equity Futures Trading are regulated by SEBI. FMC only regulated commodities futures trading. Financial futures (like equity and currency futures) were regulated by SEBI.