Q341. The GST Compensation Cess is primarily levied on which category of goods?
Indian Economy: RAS Prelims MCQs
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.
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Q342. Consider the following statements regarding the GST compensation mechanism:
I. The base year for calculating the revenue of a State was fixed as 2015-16.
II. A projected growth rate of 14% per annum was assumed for calculating state revenue.
III. The compensation period ended permanently in June 2022 with no extensions for any purpose.
IV. To meet the shortfall during the COVID-19 pandemic, the Centre borrowed funds and passed them to States as back-to-back loans.
Which combination represents the correct statements?
I. The base year for calculating the revenue of a State was fixed as 2015-16.
II. A projected growth rate of 14% per annum was assumed for calculating state revenue.
III. The compensation period ended permanently in June 2022 with no extensions for any purpose.
IV. To meet the shortfall during the COVID-19 pandemic, the Centre borrowed funds and passed them to States as back-to-back loans.
Which combination represents the correct statements?
Explanation
To calculate compensation, state revenues from 2015-16 were grown at a projected fourteen percent annually. When the COVID-19 pandemic caused revenue shortfalls, the Centre provided back-to-back loans to the states to cover the gap. Although the compensation period was for five years, the cess collection was extended to repay these loans, even though the direct compensation to states ended in June 2022.
Q343. The collection of GST Compensation Cess was extended until March 2026. What is the primary purpose of this extension?
Explanation
The GST Compensation Cess collection was extended until March 2026 so that the Centre could repay the principal and interest on the back-to-back loans it took to compensate the States for their GST revenue losses.
Q344. Match the type of scheme or fund in List I with its funding pattern or feature in List II:
Choose the correct answer:
| Type of Scheme/Fund | Funding Pattern/Feature |
|---|---|
| A. Central Sector Schemes | i. 100% funded by the Union Government |
| B. Centrally Sponsored Schemes | ii. Jointly funded by the Centre and States |
| C. Finance Commission Grants | iii. Statutory devolution not requiring matching State funds |
| D. Public Account Funds | iv. Moneys held by the Government as a banker |
Explanation
Central Sector Schemes are fully funded by the Union, while Centrally Sponsored Schemes involve shared funding between the Centre and States. Finance Commission grants provide statutory transfers that do not require matching funds. The Public Account holds money as a banker for the people. Understanding these different funding patterns is essential for analyzing the fiscal relations and resource management within India.
Q345. Consider Statement I and Statement II regarding Centrally Sponsored Schemes (CSS).
Statement I: Core of the Core schemes under CSS include umbrella programs for the most vulnerable groups, such as MGNREGA.
Statement II: The funding pattern for Core of the Core schemes requires mandatory 50% contribution from all States including Special Category States.
Statement I: Core of the Core schemes under CSS include umbrella programs for the most vulnerable groups, such as MGNREGA.
Statement II: The funding pattern for Core of the Core schemes requires mandatory 50% contribution from all States including Special Category States.
Explanation
Core of the Core schemes, like MGNREGA, target the most vulnerable populations. While they are a priority, the funding pattern is not a flat fifty percent for everyone. For Special Category States, the Union usually contributes a much higher proportion, often ninety percent. This recognizes the limited revenue capacity of these states and ensures that essential social safety nets are maintained nationwide.
Q346. Consider the following statements about Centrally Sponsored Schemes (CSS):
I. They are formulated on subjects in the State List to encourage states to prioritize national goals.
II. The general sharing pattern for "Core" schemes is 60:40 between Centre and general category States.
III. General category states mostly contribute 40% towards the "Core" CSS.
IV. The Centre’s contribution to North-Eastern and Himalayan States is typically 90%.
V. All CSS must be implemented through direct benefit transfer (DBT) directly from the Central Government to beneficiaries, bypassing the State treasury.
Which of the combinations given above represents correct statements?
I. They are formulated on subjects in the State List to encourage states to prioritize national goals.
II. The general sharing pattern for "Core" schemes is 60:40 between Centre and general category States.
III. General category states mostly contribute 40% towards the "Core" CSS.
IV. The Centre’s contribution to North-Eastern and Himalayan States is typically 90%.
V. All CSS must be implemented through direct benefit transfer (DBT) directly from the Central Government to beneficiaries, bypassing the State treasury.
Which of the combinations given above represents correct statements?
Explanation
Centrally Sponsored Schemes are designed for subjects in the State List but are partially funded by the Union to achieve national development goals. The standard sharing ratio for core schemes is sixty to forty for general states. For North-Eastern and Himalayan states, the Union contributes ninety percent of the total project cost to support their unique developmental challenges and financial limitations.
Q347. Which of the following is NOT a consequence of the proliferation of Centrally Sponsored Schemes on State finances?
Explanation
The rise of Centrally Sponsored Schemes often limits state flexibility because these programs come with strict central guidelines and mandatory matching requirements. States must divert their own resources to meet these conditions, reducing the funds available for their own unique priorities. This can strain both the financial health and the administrative capacity of state governments to manage numerous overlapping programs.
Q348. What is the most appropriate reason for the rationalisation of Centrally Sponsored Schemes into umbrella schemes based on the recommendations of a Sub-Group of Chief Ministers?
Explanation
Rationalizing Centrally Sponsored Schemes into umbrella programs aims to simplify the fiscal landscape. By grouping related schemes, the government reduces administrative complexity and allows states to tailor implementations to local needs. This shift was recommended to enhance efficiency and ensure that central funding effectively supports state efforts without imposing overly rigid or redundant requirements on the local administration.
Q349. Identify the correct pair regarding the categorization of schemes in India:
Explanation
Central Sector Schemes are entirely funded and implemented by Union Ministries on subjects within the Union List. In contrast, Centrally Sponsored Schemes involve cooperation between the Centre and States. Identifying these differences is key to understanding how policy is executed. While the Centre provides the framework and funding for sector schemes, it relies on state machinery for sponsored programs.
Q350. Match the body or mechanism in List I with its function in federalism in List II:
Choose the correct answer:
| Body/Mechanism | Function in Federalism |
|---|---|
| A. Planning Commission | i. Investigates and discusses subjects of common interest among States |
| B. NITI Aayog | ii. Statutory body recommending tax devolution based on constitutional mandate |
| C. Finance Commission | iii. Recommends policy direction utilizing cooperative and competitive federalism |
| D. Inter-State Council | iv. Exercised the power to allocate discretionary plan grants to states |
Explanation
Various bodies facilitate federal relations. The Planning Commission formerly managed discretionary plan grants, while NITI Aayog now provides policy direction. The Finance Commission is a statutory body recommending tax devolution. The Inter-State Council serves as a forum for discussing common interests. Together, these institutions coordinate the economic and administrative activities of the Union and the States to promote national unity.Answer key for these questions
| Q | Correct answer |
|---|---|
| 341 | (c) Luxury items and demerit goods including tobacco products and motor vehicles |
| 342 | (b) I, II and IV only |
| 343 | (d) To repay the principal and interest on back- to-back loans taken by the Centre |
| 344 | (a) A-i, B-ii, C-iii, D-iv |
| 345 | (c) Statement I is correct but Statement II is incorrect |
| 346 | (a) I, II, III, and IV only |
| 347 | (a) It provides States with absolute flexibility in designing local interventions. |
| 348 | (b) To reduce administrative overlaps and provide greater flexibility for States |
| 349 | (b) Central Sector Schemes -- Implemented directly by the Central Ministries |
| 350 | (a) A-iv, B-iii, C-ii, D-i |
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.