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 321–330 of 848 questions
Browse Indian Economy chapters
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q321. Consider the following criteria used for tax devolution by the 15th Finance Commission: I. Tax and Fiscal Efforts II. Demographic Performance III. Forest and Ecology Which of the combinations given above are considered ‘Performance-based’ criteria?
Explanation
Performance-based criteria aim to incentivize states to improve their governance and demographic outcomes. Tax and fiscal effort rewards states for efficient revenue collection relative to their economic capacity. Demographic performance rewards states for achieving lower fertility rates. While forest and ecology is an important criterion, it is primarily compensatory for the lost opportunity cost of maintaining green cover.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q322. Which of the following is NOT a type of grant-in-aid recommended by the Finance Commission?
Explanation
The Finance Commission recommends statutory grants, including revenue deficit grants, local body support, and disaster relief funds. These are primarily governed by Article 275. In contrast, discretionary grants under Article 282 are made by the Union or States for any public purpose and do not require the commission’s recommendation. They allow the executive to respond to specific policy needs.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q323. What is the primary purpose of ‘Post-Devolution Revenue Deficit Grants’ recommended by the Finance Commission?
Explanation
Post-devolution revenue deficit grants are designed to support states that still face a financial shortfall after receiving their share of central taxes. The Finance Commission assesses each state’s revenue and expenditure to determine if a gap exists. These grants ensure that every state has enough resources to maintain basic services and administrative functions, regardless of their inherent revenue-generating capacity.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q324. Identify the correct pair regarding local body grants as recommended by the 15th Finance Commission:
Explanation
The 15th Finance Commission introduced tied grants for local bodies to ensure funding for national priorities. Specifically, these funds are earmarked for drinking water, rainwater harvesting, and sanitation services. This approach ensures that basic infrastructure is developed at the grassroots level. Basic grants, on the other hand, provide untied funds that local bodies can use for other local needs.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q325. Match the type of grant in List I with its targeted outcome or feature in List II:
Type of Grant
Targeted outcome/Feature
A. Revenue Deficit Grants
i. Empowerment of PRIs and ULBs
B. State Disaster Risk Management Fund (SDRMF)
ii. Meeting the assessed gap in revenue accounts
C. Sector-specific Grants
iii. Enhancing health systems and education quality
D. Local Body Grants
iv. Mitigation and capacity building for natural calamities
Choose the correct answer:
Explanation
Fiscal federalism involves various grants to support specific state needs and local administration. Revenue deficit grants address the gap in state budgets, while the disaster risk management fund provides for natural calamities. Sector-specific grants target improvements in critical areas like health. Local body grants empower grassroots governance by providing essential funding for rural and urban administrative units throughout the Indian federation.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q326. Given below are two statements, one labeled as Assertion (A) and the other as Reason (R): Assertion (A): Article 275 of the Constitution provides for statutory grants-in-aid to States in need of assistance. Reason (R): These grants are charged on the Consolidated Fund of India and are determined based on the recommendations of the Finance Commission.
Explanation
Article 275 provides for statutory grants-in-aid to states that require financial assistance. These grants are charged directly on the Consolidated Fund of India, making them mandatory once approved. The Finance Commission determines the eligibility and amount for these grants, ensuring that the distribution is based on objective fiscal needs rather than the discretionary preferences of the central government.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q327. Which of the following statements correctly describes a feature of Grants-in-aid under Article 282?
Explanation
Article 282 provides a flexible mechanism for the Union or States to provide grants for any public purpose. These are discretionary and do not fall under the mandatory recommendations of the Finance Commission. While often used for Centrally Sponsored Schemes, they offer the government a way to address immediate policy goals and developmental priorities that might not be covered.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q328. Consider the following statements regarding the GST Council: I. It is a statutory body established by an Act of Parliament in 2017. II. It is chaired by the Union Finance Minister. III. The vote of the Central Government has a weightage of one-third of the total votes cast. IV. Every decision of the Council must be taken by a majority of not less than three-fourths of the weighted votes. Which combination represents the correct statements?
Explanation
The GST Council is a constitutional body, not just statutory, chaired by the Union Finance Minister. It ensures a collaborative approach to taxation. Decisions require a three-fourths majority, with the Centre holding one-third of the voting power and all States together holding two-thirds. This structure prevents either the Centre or a small group of States from making unilateral decisions.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q329. What is the intended effect of requiring a three-fourths majority for decisions in the GST Council with the Centre holding one-third weightage and States holding two-thirds?
Explanation
The weighted voting system in the GST Council is designed to promote consensus. Since the Centre holds one-third of the votes and decisions require a seventy-five percent majority, the Centre cannot pass resolutions without the support of many states. Similarly, the states cannot act without the Centre’s agreement. This creates a powerful incentive for negotiation and cooperative fiscal decision-making.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q330. The conceptual framework of the GST Council exemplifies which form of federalism?
Explanation
Cooperative federalism is best exemplified by the GST Council, where the Centre and States work together on a common platform. By sharing the power to decide tax rates and rules, both levels of government participate in economic management. This collaborative framework reduces conflicts, harmonizes the national market, and ensures that the interests of both the Union and the States.
Answer key for these questions
Q
Correct answer
321
(a) I and II only
322
(b) Discretionary Grants under Article 282
323
(d) Bridging the state budgetary gap after accounting for central tax sharing
324
(a) Tied Grants -- Funds reserved for drinking water and sanitation priorities
325
(a) A-ii, B-iv, C-iii, D-i
326
(a) Both A and R are true and R is the correct explanation of A.
327
(d) They are discretionary grants made by the Union or a State for any public purpose.
328
(b) II, III and IV only
329
(c) Ensuring neither Centre nor States can act alone, fostering cooperative federalism
330
(d) Cooperative Federalism
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.
