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 381–390 of 848 questions
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RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q381. Consider Statement I and Statement II regarding local body grants. Statement I: The 15th Finance Commission has made it mandatory for local bodies to have both provisional and audited accounts online to receive tied grants. Statement II: This condition aims to ensure financial transparency and accountability at the grassroots level.
Explanation
The 15th Finance Commission introduced strict transparency requirements for local bodies. To receive tied grants, these bodies must now maintain and publish both provisional and audited accounts online. This condition is designed to improve financial accountability at the grassroots level. By making funding conditional on transparency, the commission aims to strengthen the administrative capacity and integrity of India’s rural and urban local governments.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q382. Which of the following statements regarding the State Finance Commission (SFC) is incorrect?
Explanation
The State Finance Commission and the Central Finance Commission operate at different levels. The SFC focuses on revenue sharing between the state and its local bodies, while the CFC manages the distribution of national taxes among the states. The SFC does not replace the CFC; rather, both are essential components of the multi-tiered fiscal framework that ensures resources reach every level of governance.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q383. The mechanism of "Ways and Means Advances" (WMA) is utilized in fiscal federalism to:
Explanation
Ways and Means Advances are short-term credit facilities provided by the Reserve Bank of India to the government. This mechanism helps states manage temporary gaps between their revenue receipts and expenditure needs. It is not a source of long-term funding but a liquidity management tool that ensures the smooth functioning of state treasuries without the need for constant, unplanned market borrowing or sudden spending cuts.
RAS PrelimsIndian Economy · Fiscal Federalism and Finance Commission
Q384. A State government decides to launch an ambitious welfare scheme providing free electricity, which strains its budget. According to fiscal federal principles and the FRBM Act, what is the most immediate constraint the state will face if it attempts to fund this through unlimited borrowing?
Explanation
State governments are subject to fiscal discipline frameworks that limit their annual borrowing to a specific percentage of their Gross State Domestic Product. This prevents excessive debt accumulation that could destabilize the national economy. If a state launches expensive welfare schemes, it must manage the expenditure within these strictly defined and monitored constitutional and statutory borrowing limits to ensure long-term fiscal sustainability and stability.
Q385. What was the approximate contribution of the agriculture and allied sector to India’s Gross Value Added (GVA) at current prices during the fiscal year 2022-23?
Explanation
The agriculture and allied sector remains a cornerstone of the Indian economy, providing livelihoods to a significant portion of the population. For the fiscal year 2022-23, the sector’s contribution to India’s Gross Value Added at current prices was approximately 18.3 percent. This reflects the sector’s resilience and its vital role in supporting rural incomes and food security.
Q386. Which of the following best describes the structural transformation of the Indian economy regarding the agricultural sector since independence?
Explanation
India’s economic structure has shifted significantly since 1947, showing a common developmental trend where the primary sector’s relative weight decreases. While agriculture’s share in the Gross Domestic Product has declined heavily over the decades, the proportion of the total workforce dependent on it hasn’t fallen at a similar pace. This imbalance highlights the need for rural industrialization.
Q387. Which of the following statements regarding the role of agriculture in the Indian economy is incorrect?
Explanation
Agriculture is pivotal for India, serving as the primary source of livelihood for over half the workforce and supplying raw materials to industries. It also ensures national food security. However, agricultural exports do not account for more than half of India’s total export earnings. Most exports are currently driven by the manufacturing and services sectors instead.
Q388. Read the following statements regarding agricultural growth in India and select the correct answer from the options given below: Statement I: The agriculture sector demonstrated higher resilience compared to the industrial and service sectors during the COVID-19 pandemic. Statement II: Gross Capital Formation in agriculture as a percentage of agricultural GVA has consistently remained above 30 percent for the last decade.
Explanation
During the global COVID-19 pandemic, the agricultural sector demonstrated remarkable resilience, maintaining positive growth while the industrial and service sectors faced severe contractions. In contrast, the Gross Capital Formation in agriculture as a percentage of its Gross Value Added has generally fluctuated below the thirty percent mark. Public and private investment levels remain a critical area for improvement.
Q389. The following question consists of two statements, one labeled as Assertion (A) and the other as Reason (R). Examine these two statements carefully and select the correct answer from the options given below: Assertion (A): A declining share of agriculture in the Gross Domestic Product is universally considered an indicator of economic development. Reason (R): As an economy develops, the secondary and tertiary sectors grow at a faster rate than the primary sector, altering the GDP composition.
Explanation
A declining share of agriculture in the Gross Domestic Product is a hallmark of economic advancement. As nations develop, the secondary and tertiary sectors naturally grow at much faster rates than the primary sector. This structural shift alters the overall composition of the economy, reflecting technological progress and a transition toward industrialization and modern service-based activities.
Q390. Which state was the first in independent India to pass legislation for the abolition of the Zamindari system?
Explanation
Land reform was a top priority for independent India to ensure social justice and agricultural efficiency. The Madras province, currently known as Tamil Nadu, was the first state in independent India to pass legislation for the abolition of the Zamindari system. This legislative move aimed to remove intermediaries between the state and actual tillers, ensuring more equity.
Answer key for these questions
Q
Correct answer
381
(a) Both Statement I and Statement II are correct
382
(a) It replaces the Central Finance Commission’s role in allocating national grants to the state completely.
383
(c) Help states tide over temporary mismatches in their cash flow accounts
384
(d) The state’s borrowing is capped at a fixed percentage of its annual GSDP
385
(c) 18.3 percent
386
(a) The share of agriculture in GDP has declined heavily, but the proportion of the workforce dependent on it has not declined commensurately.
387
(c) Its contribution to India’s total export earnings has been steadily increasing and currently stands above 50 percent.
388
(c) Statement I is true but Statement II is false.
389
(a) Both A and R are true and R is the correct explanation of A.
390
(b) Madras
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.
