Monetary and Fiscal Policy, Union Budget and Resource Mobilisation: RAS Prelims MCQs
86 RAS Prelims MCQs on monetary and fiscal policy, the Union Budget and resource mobilisation test the tools of the RBI, the Monetary Policy Committee and inflation targeting, along with the deficits, taxes and budget terms. Each question asks for the effect of a policy change on liquidity or credit, so the explanations trace the transmission step by step.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 81–86 of 86 questions
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q81. Consider the following statements distinguishing ‘Strategic Disinvestment’ from ‘Minority Stake Sale’: I. Strategic disinvestment involves the transfer of management control to a private entity. II. Minority stake sale allows the government to retain more than 51% ownership and management control. III. Both methods are classified as Revenue Receipts in the Union Budget. Which of the above statements are correct?
Explanation
Strategic sales involve the government giving up both a significant portion of its shares and the control over the company’s management. In contrast, a minority stake sale allows the government to raise capital while still remaining the majority owner and decision-maker. These transactions are classified as non-debt capital receipts in the budget because they involve the sale of public assets.
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q82. In India, which department under the Ministry of Finance is responsible for managing the disinvestment of government equity in Central Public Sector Enterprises?
Explanation
This specific unit within the finance ministry is tasked with overseeing the sale of government equity in central public enterprises. It handles everything from identifying suitable companies for sale to managing the legal and financial processes involved in the transaction. Its goal is to optimize the value of the government’s investments while ensuring that the disinvestment process remains transparent and efficient.
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q83. Identify the correct statement regarding the ‘National Monetisation Pipeline’ (NMP).
Explanation
This initiative focuses on generating revenue from existing public infrastructure assets without selling them permanently. The government leases these assets, such as roads, railways, or power lines, to private operators for a specific period in exchange for upfront or periodic payments. This approach allows the state to raise funds for new infrastructure projects while retaining ultimate ownership of the national assets.
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q84. Match the following terms related to disinvestment in List I with their meanings in List II. List I: (Term) A. Initial Public Offering (IPO) B. Offer for Sale (OFS) C. Strategic Disinvestment D. Asset Monetization List II: (Meaning) i. Leasing core infrastructure assets to private operators ii. Unlisted PSU offering shares to the public for the first time iii. Transfer of ownership and management control iv. Listed PSU promoters selling shares on the exchange platform
Explanation
An initial public offering occurs when a company sells shares to the public for the first time. An offer for sale is used by promoters of listed companies to sell their holdings. Strategic disinvestment involves a transfer of control to a private buyer. Asset monetization focuses on leasing out infrastructure to private entities to generate revenue while maintaining public ownership.
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q85. Read the following statements and select the correct option. Statement I: Disinvestment always leads to the complete privatization of a Public Sector Enterprise. Statement II: The government can disinvest up to 49% of its equity in a PSU while still retaining majority ownership and control.
Explanation
Disinvestment does not always mean a company is fully privatized; it can involve selling only a small fraction of shares. The government often chooses to sell up to forty-nine percent of its equity, which allows it to raise significant capital while still maintaining a majority stake and full management control. This strategy balances the need for revenue with continued public oversight.
RAS PrelimsIndian Economy · Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
Q86. The proceeds received by the Government of India from the disinvestment of Central Public Sector Enterprises are channeled into which of the following funds?
Explanation
Money raised from the sale of shares in public enterprises is deposited into a specific fund created for this purpose. These resources are intended to be used for social sector programs and for supporting the capital requirements of other public sector units. This ensures that the proceeds from selling national assets are reinvested into productive and welfare-oriented activities for the entire country.
Answer key for these questions
Q
Correct answer
81
(a) I and II only
82
(c) Department of Investment and Public Asset Management
83
(d) Unlocking value in brownfield assets via leasing
84
(a) A-ii, B-iv, C-iii, D-i
85
(d) Statement I is incorrect but Statement II is correct
86
(b) National Investment Fund (NIF)
Key facts from Monetary and Fiscal Policy, Union Budget and Resource Mobilisation
The objective of monetary policy under the RBI Act, 1934 is to maintain price stability while supporting growth.
If the RBI increases the CRR, the lendable resources of commercial banks decrease.
A higher reverse repo rate encourages banks to park funds with the RBI, reducing liquidity.
The statutory framework for the Monetary Policy Committee was introduced by amending the Reserve Bank of India Act, 1934.
Inflation targeting means keeping retail inflation within a statutory target range.
When the RBI buys government securities from the market, the total money supply increases.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Monetary and Fiscal Policy, Union Budget and Resource Mobilisation?
This page has 86 practice MCQs on Monetary and Fiscal Policy, Union Budget and Resource Mobilisation (Indian Economy). Each has the correct answer, and most have an explanation.
What happens when the RBI raises the CRR?
Banks must keep a larger share of their deposits with the RBI, so their lendable resources decrease. Credit becomes tighter, and the policy is used to control inflation.
What is inflation targeting?
A monetary policy framework in which the central bank aims to keep inflation within a stated range. In India the RBI works to a statutory target for retail (CPI) inflation, and the Monetary Policy Committee decides the policy rate.
What is the effect of the RBI buying government securities?
It pays the sellers with new money, so the total money supply in the economy increases. This is an open market operation, used to add liquidity, and selling securities does the opposite and absorbs liquidity from the banks.
