Q551. Which of the following statements about the Foreign Investment Promotion Board (FIPB) is correct?
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 551–560 of 848 questions
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Q552. Consider the following outcomes of the pre- 1991 Industrial Policy:
I. High cost of production and poor quality of goods
II. Lack of technological modernization
III. Phenomenal growth of global exports in manufactured goods
IV. Delays in project implementation due to red tape
Which of the combinations given above correctly identifies the negative outcomes (problems)?
I. High cost of production and poor quality of goods
II. Lack of technological modernization
III. Phenomenal growth of global exports in manufactured goods
IV. Delays in project implementation due to red tape
Which of the combinations given above correctly identifies the negative outcomes (problems)?
Explanation
The industrial regime before 1991 was characterized by several negative outcomes that hindered economic growth. These included high production costs and poor product quality due to a lack of competition. Furthermore, strict regulations led to a lack of technological modernization and significant delays in project implementation caused by bureaucratic red tape. Unlike some nations, India’s share in global manufactured exports remained low.
Q553. The policy of Liberalisation initiated in 1991 meant the removal of constraints in the economic system. In the industrial sector, this was most visibly marked by the abolition of:
Explanation
The policy of liberalisation initiated in 1991 sought to dismantle the restrictive regulatory framework that hampered industrial growth. The most visible and significant reform in the industrial sector was the abolition of the industrial licensing system for the vast majority of sectors. This allowed private entrepreneurs to make investment decisions based on market signals rather than seeking government permission, fostering competition.
Q554. Read the following statements regarding Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI):
I. FDI implies investment in a foreign country involving management control.
II. FPI generally involves short-term investment in financial assets like stocks and bonds.
Which of the statements given above is/are correct?
I. FDI implies investment in a foreign country involving management control.
II. FPI generally involves short-term investment in financial assets like stocks and bonds.
Which of the statements given above is/are correct?
Explanation
Foreign investment is broadly classified into Foreign Direct Investment and Foreign Portfolio Investment. FDI involves a long-term interest and usually includes a significant degree of management control over a business in a foreign country. In contrast, FPI typically involves shorter-term investments in financial assets such as stocks and bonds without direct control over the company operations. Both are essential.
Q555. What was the effect of systematic tariff reduction under globalization on domestic manufacturing in India?
Explanation
Under the process of globalization, India systematically reduced import tariffs, which had a profound impact on domestic manufacturing. This policy change ended the era of high protectionism and forced domestic firms to face international competition. To survive, Indian companies were compelled to become more cost-efficient and quality-conscious. This shift led to improvements in productivity, better resource allocation, and overall industrial modernisation.
Q556. The term ‘Brownfield FDI’ refers to:
Explanation
Brownfield Foreign Direct Investment occurs when a company or government entity purchases or leases existing production facilities or acquires an existing company in a foreign country to launch new business activity. This is different from greenfield investment, where a parent company starts a new venture by constructing new facilities. Brownfield investments are often preferred because they allow for faster market entry.
Q557. Consider the following states and arrange them from North to South as they are geographically covered along the Delhi-Mumbai Industrial Corridor (DMIC) alignment:
I. Haryana
II. Rajasthan
III. Gujarat
IV. Maharashtra
Select the correct order:
I. Haryana
II. Rajasthan
III. Gujarat
IV. Maharashtra
Select the correct order:
Explanation
The Delhi-Mumbai Industrial Corridor alignment follows a specific geographical path from North to South across several Indian states. It begins in the northern state of Haryana, then passes through the extensive territory of Rajasthan. Continuing southward, the corridor enters Gujarat, which hosts a significant number of industrial nodes. Finally, it reaches its southern terminus in Maharashtra at the Jawaharlal Nehru Port.
Q558. The concept of integrating industrial development with robust transportation networks to reduce logistics costs is best exemplified in India by:
Explanation
The Industrial Corridors program is a strategic initiative designed to integrate industrial development with high-speed transportation networks.
Q559. Which of the following is a major criticism of Special Economic Zones (SEZs) in India?
Explanation
Despite their potential for boosting exports and attracting investment, Special Economic Zones in India have faced significant criticism. A major concern involves the acquisition of large tracts of fertile agricultural land for industrial purposes, which has often led to the displacement of local farmers and affected their livelihoods. Other criticisms include the potential for creating economic disparities that do not benefit everyone.
Q560. Read the following statements regarding the performance of the MSME sector in India:
I. It accounts for more than 40% of India’s total exports.
II. It is the second-largest employer in the country after agriculture.
III. MSMEs are completely immune to technological disruptions and credit crunches.
Which of the statements given above are correct?
I. It accounts for more than 40% of India’s total exports.
II. It is the second-largest employer in the country after agriculture.
III. MSMEs are completely immune to technological disruptions and credit crunches.
Which of the statements given above are correct?
Explanation
The Micro, Small and Medium Enterprises sector plays a crucial role in India’s development. It currently accounts for more than 40% of the country’s total exports and is recognized as the second-largest employer after agriculture. However, the sector remains vulnerable to various external shocks, such as technological disruptions and periodic credit crunches. Therefore, claiming that MSMEs are immune to challenges is inaccurate.Answer key for these questions
| Q | Correct answer |
|---|---|
| 551 | (a) Abolished in 2017, with approvals delegated to respective ministries. |
| 552 | (d) I, II and IV |
| 553 | (b) The industrial licensing system for most sectors |
| 554 | (c) Both I and II |
| 555 | (d) Forced firms to become more cost-efficient and quality-conscious. |
| 556 | (a) Acquiring or merging with an existing company in a foreign country. |
| 557 | (a) I, II, III, IV |
| 558 | (c) The Industrial Corridors program |
| 559 | (d) Acquisition of fertile land causing displacement of farmers. |
| 560 | (c) I and II only |
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.