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 491–500 of 848 questions
Browse Indian Economy chapters
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q491. Given below are two statements, one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): The Licence Raj system in India led to widespread corruption and rent-seeking behavior by industrialists. Reason (R): Entrepreneurs spent more time and resources managing government bureaucrats to secure licenses rather than improving product quality and market competitiveness. Which of the following is correct?
Explanation
The Licence Raj created an environment where government permits were scarce and valuable resources. This led to rent-seeking behavior, where industrialists focused on lobbying bureaucrats rather than improving efficiency. Consequently, substantial time and capital were diverted from innovation and quality improvement toward navigating complex administrative hurdles. This structural inefficiency was a primary driver of widespread corruption and stagnant competitiveness.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q492. In the context of the pre-1991 industrial regime, what was the primary objective of the MRTP Act, 1969?
Explanation
The Monopolies and Restrictive Trade Practices Act of 1969 was enacted to ensure that the operation of the economic system did not result in the concentration of wealth. It aimed to prohibit monopolistic and restrictive trade practices that were prejudicial to public interest. Large companies with assets above a certain threshold required special approval for expansion to prevent market dominance.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q493. Match List I with List II and select the correct answer.
Legislation/Policy
Key Feature/Objective
A. IPR 1956
i. Framework for industrial licensing
B. MRTP Act 1969
ii. Strict regulation of foreign exchange
C. FERA 1973
iii. Check on dominant trade practices
D. IDRA 1951
iv. Classification of industries into three schedules
Explanation
The industrial regulatory framework in India comprised several key pillars. The Industrial Policy Resolution of 1956 classified industries into three schedules to define state roles. The MRTP Act focused on checking dominant trade practices, while the Industries Development and Regulation Act provided the mechanism for industrial licensing. Lastly, the Foreign Exchange Regulation Act of 1973 imposed strict controls.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q494. Which of the following was NOT a macroeconomic crisis indicator that forced India to adopt the New Economic Policy in 1991?
Explanation
The 1991 economic crisis was characterized by severe macroeconomic imbalances, including a critical shortage of foreign exchange reserves and high fiscal deficits. Inflation reached double digits, creating significant economic instability. In contrast, an unprecedented surplus in the current account balance was not an indicator of this crisis; rather, India faced a massive deficit that necessitated urgent structural adjustment and reforms.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q495. Consider the following statements regarding the features of the Licence Raj in India: I. It required government approval to set up new industrial units. II. It regulated the expansion of capacity of existing industries. III. It mandated government permission to change the product mix. IV. It was highly effective in completely eliminating regional industrial inequalities. V. It imposed restrictions on the import of capital goods and raw materials. Which of the statements given above are correct?
Explanation
The Licence Raj was a comprehensive regulatory system that required government permission for setting up new units, expanding capacity, and changing product mixes. It also imposed strict restrictions on importing capital goods and raw materials. Although intended to reduce regional inequalities, the system was often criticized for its inefficiency and failure to achieve balanced industrial growth across all areas effectively.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q496. Which international financial institution provided emergency structural adjustment loans to India during the 1991 crisis, conditional upon the implementation of economic reforms?
Explanation
During the severe balance of payments crisis in 1991, India approached the International Monetary Fund and the World Bank for financial assistance. These international institutions provided emergency structural adjustment loans to help stabilize the economy. The assistance was conditional upon India implementing a series of fundamental economic reforms, which eventually led to the adoption of the New Economic Policy.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q497. Identify the correct pair regarding the components of the New Economic Policy 1991.
Explanation
In the 1991 New Economic Policy, liberalisation specifically refers to the removal of government-imposed restrictions on the entry and growth of the private sector. This involved abolishing industrial licensing and reducing barriers to trade. In contrast, stabilisation measures were short-term actions to control inflation, while structural reforms were long-term policies aimed at improving efficiency and competitiveness in the global market.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q498. Read the following statements regarding the deregulation of industries under the New Economic Policy 1991: I. Industrial licensing was abolished for all industries without exception. II. The number of industries reserved for the public sector was drastically reduced. III. The asset threshold limit for MRTP companies was removed. IV. Phased manufacturing programs were abolished. Which of the combinations given above is correct?
Explanation
The 1991 industrial policy significantly deregulated the economy by reducing the number of industries reserved exclusively for the public sector. It also removed the asset threshold limit for companies under the MRTP Act, allowing for easier expansion. Additionally, phased manufacturing programs were abolished to simplify industrial operations. However, industrial licensing was not completely abolished for every single industry without any exceptions.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q499. Currently, which among the following industries requires compulsory licensing in India?
Explanation
Following the deregulation started in 1991, industrial licensing is now required for only a very limited number of sectors. Currently, electronic aerospace and all types of defence equipment are among the few industries that still require compulsory licensing due to strategic and security considerations. Most other sectors, like automobiles, textiles, and building materials, have been fully deregulated to encourage investment.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q500. The process of transferring the ownership, management, and control of a public sector enterprise to the private sector is formally known as:
Explanation
Privatisation involves the transfer of ownership, management, and control of public sector enterprises to the private sector. This can be achieved through various methods, including the sale of equity or the complete divestment of government holdings. The primary objective is to improve the efficiency, productivity, and competitiveness of these enterprises by subjecting them to market discipline and reducing government interference.
Answer key for these questions
Q
Correct answer
491
(a) Both A and R are true and R is the correct explanation of A.
492
(c) To prevent the concentration of economic power to the common detriment
493
(a) A-iv, B-iii, C-ii, D-i
494
(d) An unprecedented surplus in the current account balance
495
(b) I, II, III and V
496
(c) International Monetary Fund and World Bank
497
(d) Liberalisation - Removal of entry and growth restrictions on the private sector
498
(a) II, III and IV
499
(b) Electronic aerospace and defence equipment
500
(b) Privatisation
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.
