848 RAS Prelims practice MCQs on the Indian economy are on this page, in 10 chapters. They cover economic growth and development, the Human Development Index, monetary and fiscal policy and the Union Budget, fiscal federalism, agricultural development, industrial reforms and LPG, the service sector, energy and transport, skill development and employment, and social justice. Each question has an answer and an explanation.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 301–310 of 848 questions
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RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q301. Match the Constitutional Articles in List I with their respective provisions in List II:
Constitutional Articles
Provisions
A. Article 275
i. Borrowing by States
B. Article 282
ii. Discretionary grants by the Union or States
C. Article 292
iii. Borrowing by the Government of India
D. Article 293
iv. Statutory grants to certain States
Choose the correct answer:
Explanation
Specific articles govern different aspects of financial relations. Article 275 allows for statutory grants to states in need, while Article 282 provides for discretionary grants for public purposes. Articles 292 and 293 delineate the borrowing powers of the Union and the States respectively. These provisions ensure a balanced framework for both mandatory transfers and necessary debt management.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q302. Consider the following statements about the Divisible Pool of taxes: I. It includes all taxes and duties collected by the Union Government. II. Surcharges levied for purposes of the Union form a part of the divisible pool. III. Cesses levied for specific purposes are excluded from the divisible pool. IV. Corporation tax was included in the divisible pool following the 80th Constitutional Amendment Act. V. The cost of collection is deducted before distributing the net proceeds. Which of the combinations given above represents the correct statements?
Explanation
The divisible pool includes most central taxes, including corporation tax since the 80th Amendment. However, cesses and surcharges are excluded as they are reserved for the Union. To determine the actual amount shared, the cost of collection is deducted from the gross receipts. This net proceeds figure forms the basis for distribution as recommended by the commission.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q303. Arrange the following stages of devolution of Union taxes to States in the correct logical sequence: I. Deduction of cost of collection to determine net proceeds II. Exclusion of Cesses and Surcharges III. Collection of gross tax revenue by the Central Board of Direct Taxes and CBIC IV. Application of the horizontal distribution formula among States Select the correct sequence:
Explanation
The devolution process starts with the collection of gross tax revenue by central agencies. From this, cesses and surcharges are excluded as they are not shared. Then, the costs of collection are subtracted to arrive at the net proceeds. Finally, the horizontal distribution formula is applied to determine the individual share of each state in the pool.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q304. All of the following form part of the Divisible Pool under Article 270, EXCEPT:
Explanation
While major taxes like income tax, corporation tax, and CGST are shared between the Centre and States, cesses are collected for specific purposes and remain with the Union. The Health and Education Cess is a prime example of a levy that does not enter the divisible pool. This distinction significantly impacts the total resources available for state devolution.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q305. Identify the correct pair regarding Constitutional financial provisions:
Explanation
Article 268 covers specific duties, like stamp duties, which the Union levies but the States collect and retain. This mechanism allows for national uniformity in tax rates while providing states with a direct source of revenue. Other articles define different sharing arrangements, ensuring that the fiscal structure remains responsive to both central coordination and state-level financial requirements.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q306. Consider the following statements regarding the Finance Commission: I. It is a quasi-judicial body constituted under Article 280 of the Constitution. II. It is constituted by the President of India every five years or at such earlier time as he considers necessary. III. Its recommendations are binding on the Union Government. Which of the combinations given above is correct?
Explanation
The Finance Commission is a constitutional, quasi-judicial body formed every five years by the President under Article 280. It provides recommendations on tax sharing and grants to ensure fiscal balance. While its advice carries significant weight and is usually accepted, it is not legally binding on the Union Government, which retains final authority over implementation of these recommendations.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q307. Consider Statement I and Statement II regarding the legal framework of the Finance Commission. Statement I: The Parliament determines the qualifications of the members of the Finance Commission and the manner in which they shall be selected. Statement II: The Finance Commission (Miscellaneous Provisions) Act, 1951 was enacted by Parliament to specify these qualifications.
Explanation
The Constitution empowers Parliament to define the qualifications and selection process for Finance Commission members. To fulfill this, the Finance Commission (Miscellaneous Provisions) Act of 1951 was enacted. This legislation ensures that the commission consists of experts in law, economics, and public administration, thereby maintaining the technical competence and integrity of this vital fiscal institution.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q308. Find the odd one out with reference to the qualifications required for the members of the Finance Commission:
Explanation
The Finance Commission Act specifies that members must have expertise in judicial matters, government accounts, or financial administration. While a chairman must have experience in public affairs, sitting Members of Parliament are not among the technical qualifications listed. The aim is to maintain a professional, expert body that can objectively evaluate the complex financial needs of the federation.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q309. Who appoints the Chairman and the members of the Finance Commission?
Explanation
As a constitutional body, the Finance Commission is appointed by the President of India. This appointment process occurs every five years or earlier if necessary. By placing this power with the President, the Constitution ensures that the commission operates with high level of institutional authority, facilitating impartial recommendations regarding the distribution of national financial resources among states.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q310. The Terms of Reference (ToR) for a Finance Commission are formulated by the Central Government. What is the fundamental purpose of the ToR?
Explanation
The Terms of Reference act as the formal guidelines provided to the Finance Commission. They outline the specific fiscal issues, such as debt levels or performance incentives, that the commission must analyze. By setting these parameters, the government ensures that the commission’s recommendations address current economic priorities and help achieve broader national goals like fiscal consolidation and improved governance.
Answer key for these questions
Q
Correct answer
301
(a) A-iv, B-ii, C-iii, D-i
302
(c) III, IV and V
303
(b) III, II, I, IV
304
(c) Health and Education Cess
305
(a) Article 268 -- Union-levied duties collected and kept by the States
306
(a) I and II only
307
(a) Both Statement I and Statement II are correct
308
(d) A person who is a sitting Member of Parliament
309
(a) The President of India
310
(a) Defining the parameters and specific issues for the Commission’s evaluation
Key facts from Indian Economy
The RPSC syllabus lists economic concepts and the Indian economy as the first part of the Economy paper, followed by the economy of Rajasthan.
Concept questions test definitions: nominal and real GDP, GNP and NDP, per capita income and the value-added method.
Policy questions pair a tool with its effect, for example a rise in CRR reduces the lendable resources of banks.
Scheme questions ask for the target group, ministry or year of schemes such as PMKVY, NAPS, PM SVANidhi and PM-SYM.
Questions on Finance Commission and GST link the body to its Article, such as Article 280.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Indian Economy?
This page has 848 practice MCQs on Indian Economy. Each has the correct answer, and most have an explanation.
Which chapters does the Indian economy set cover?
Ten chapters: economic growth, development and sustainable development; measurement of development (HDI); monetary and fiscal policy and the Union Budget; fiscal federalism and the Finance Commission; agricultural development; industrial growth and LPG reforms; the service sector; energy, transport and communication; skill development and employment; and social justice and empowerment.
Is the Indian economy in the RAS Prelims syllabus?
Yes. RPSC lists Economic Concepts and the Indian Economy as the first part of the Economy paper. The second part covers the economy of Rajasthan, which is on its own page.
How should I revise economy for RAS Prelims?
Learn the definitions and the cause-and-effect chains first, then the schemes with their year, ministry and target group. Attempt each chapter, read every explanation and keep a one-line note for each scheme and body.
