Q501. What does the term ‘Strategic Disinvestment’ specifically refer to in the context of Indian public sector undertakings?
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.
Showing 501–510 of 848 questions
Browse Indian Economy chapters
Q502. Which committee was constituted by the Government of India in 1999 to recommend legislation replacing the MRTP Act, leading to the Competition Act?
Explanation
The Government of India appointed the High Level Committee on Competition Policy and Law, headed by S.V.S. Raghavan, in 1999. The committee was tasked with recommending a modern legislative framework to replace the outdated MRTP Act. Its recommendations formed the basis for the Competition Act of 2002, which shifted the focus from curbing monopolies to promoting and sustaining healthy market competition.
Q503. Match List I with List II and select the correct answer.
| Reform Concept | Practical Measure |
|---|---|
| A. Liberalisation | i. Reduction of peak import tariff rates |
| B. Privatisation | ii. Control of inflation and balance of payment |
| C. Globalisation | iii. Disinvestment of equity in PSUs |
| D. Stabilisation | iv. Abolition of industrial licensing |
Explanation
Economic reforms are categorized into various operational concepts. Liberalisation was practically achieved through the abolition of industrial licensing, while privatisation involved the disinvestment of government equity in public enterprises. Globalisation focused on integrating the domestic economy with the world through measures like reducing import tariffs. Meanwhile, stabilisation measures aimed at the short-term control of inflation and managing the balance of payments.
Q504. Which department under the Ministry of Finance is responsible for managing the central government’s investments and executing disinvestment plans?
Explanation
The Department of Investment and Public Asset Management, functioning under the Ministry of Finance, is the nodal agency for managing the central government’s investments in equity. It is specifically responsible for the policy regarding disinvestment of government shares in public sector undertakings. DIPAM also oversees the management of public assets and the professionalization of the boards of central public sector enterprises.
Q505. Which of the following represents the correct chronological sequence of industrial policy reforms in India?
Explanation
The evolution of India’s industrial policy follows a distinct timeline starting with the foundational Industrial Policy Resolution of 1956. This was followed by the enactment of the MRTP Act in 1969 to control monopolies. Significant changes occurred with the New Economic Policy in 1991, which introduced liberalisation. Finally, the Competition Act was passed in 2002 to modernize the competition regulatory framework.
Q506. Integration of the domestic economy with the world economy is achieved primarily through which of the following measures?
Explanation
Globalisation is the process of integrating the domestic economy with the world economy through various market-oriented measures. This is achieved by promoting the free flow of goods, services, capital, and technology across international borders. Reducing trade barriers, such as import tariffs and quotas, and encouraging foreign direct investment are key strategies that facilitate this integration, allowing firms to compete globally.
Q507. With reference to globalization in India, which of the following statements about ‘Quantitative Restrictions’ is correct?
Explanation
In the context of globalization, India committed to removing quantitative restrictions on imports to comply with international trade obligations. These restrictions, which limited the physical volume of goods that could be imported, were systematically phased out. By 2001, India had removed quantitative restrictions on most consumer goods and agricultural products, replacing them with tariffs to protect domestic industries and trade.
Q508. Read the following statements regarding the evolution of FDI policy in India post-1991:
I. Initially, automatic approval was granted up to 51% foreign equity in high-priority industries.
II. The Foreign Investment Promotion Board (FIPB) was established to process single-window clearances.
III. FIPB remains the sole authority for all FDI approvals in India today.
Which of the statements given above are incorrect?
I. Initially, automatic approval was granted up to 51% foreign equity in high-priority industries.
II. The Foreign Investment Promotion Board (FIPB) was established to process single-window clearances.
III. FIPB remains the sole authority for all FDI approvals in India today.
Which of the statements given above are incorrect?
Explanation
Post-1991, India’s FDI policy evolved from restrictive to highly liberalized. Initially, automatic approval was granted for up to 51% foreign equity in priority sectors, and the Foreign Investment Promotion Board was established for single-window clearances.
Q509. In which of the following sectors is Foreign Direct Investment (FDI) strictly prohibited in India?
Explanation
While India has liberalized most sectors for foreign investment, certain areas remain strictly prohibited for Foreign Direct Investment due to security, ethical, or social reasons. These prohibited sectors include atomic energy and the lottery business, which includes government or private lotteries and online lotteries. Additionally, activities like gambling, betting, and chit funds are also on the negative list for foreign investment.
Q510. Under the current FDI policy, what is the foreign direct investment limit allowed through the automatic route in the defense manufacturing sector (subject to certain conditions)?
Explanation
Under the current Foreign Direct Investment policy, the Indian government has significantly increased the limits in the defense sector to boost domestic manufacturing. Foreign investors can now invest up to 74% through the automatic route, meaning no prior government approval is required, provided they meet certain security conditions. Beyond 74%, investment is still permitted but requires prior approval through the government route.Answer key for these questions
| Q | Correct answer |
|---|---|
| 501 | (a) Transfer of ownership and management control of a CPSE to a private entity |
| 502 | (c) Raghavan Committee |
| 503 | (a) A-iv, B-iii, C-i, D-ii |
| 504 | (c) Department of Investment and Public Asset Management (DIPAM) |
| 505 | (b) IPR 1956 MRTP Act New Economic Policy Competition Act |
| 506 | (d) Promoting free flow of goods, services, capital, and technology across borders |
| 507 | (a) Removal of quantitative restrictions on consumer goods by 2001. |
| 508 | (c) III only |
| 509 | (a) Atomic Energy and Lottery Business |
| 510 | (c) 74% |
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.