UPSC 1996 › Indian Economy

15 questions · 1996 · answers as per the UPSC key

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Topics: International Trade & WTO (5)External Sector & Balance Of Payments (3)Economic Planning & Five-Year Plans (2)Fiscal Policy & Budget (2)Agriculture & Rural Development (1)International Institutions & Reports (1)National Income & Economic Growth (1)
UPSC 1996 · Q2 · Indian Economy › Fiscal Policy & Budget · Save

A redistribution of income in a country can be best brought about through

(a) progressive taxation combined with progressive expenditure
(b) progressive taxation combined with regressive expenditure
(c) regressive taxation combined with regressive expenditure
(d) regressive taxation combined with progressive expenditure
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Answer: (a) progressive taxation combined with progressive expenditure
UPSC 1996 · Q21 · Indian Economy › Fiscal Policy & Budget · Save

The following Table shows the percentage distribution of revenue expenditure of Government of India in 1989-90 and 1994-95: (Heads: Defence, Interest Payments, Subsidies, Grants to States/UTs Other) Based on this table, it can be said that the Indian economy is in poor shape because the Central Government continues to be under pressure to

(a) reduce expenditure of defence
(b) spend more and more on interest payments
(c) reduce expenditure on subsidies
(d) spend more and more as grants-in-aid to State Governments/Union Territories
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Answer: (b) spend more and more on interest payments
This question uses a table or figure from the original paper that is not reproduced here.
UPSC 1996 · Q27 · Indian Economy › Economic Planning & Five-Year Plans · Save

Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India?

(a) Stabilization is a gradual, multi-step process while structural adjustment is a quick adaptation process
(b) Structural adjustment is a gradual, multi-step process, while stabilization is a quick adaptation process
(c) Stabilization and structural adjustment are very similar and complementary policies. It is difficult to separate one from the other
(d) Stabilization mainly deals with a set of policies which are to be implemented by the Central Government while structural adjustment is to be set in motion by the State Governments
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Answer: (b) Structural adjustment is a gradual, multi-step process, while stabilization is a quick adaptation process
UPSC 1996 · Q31 · Indian Economy › International Trade & WTO · Save

Assertion (A): An important policy instrument of economic liberalization is reduction in import duties on capital goods.

Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets. In the context of the above two statements, which one of the following is correct?

(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true and R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
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Answer: (a) Both A and R are true and R is the correct explanation of A
UPSC 1996 · Q34 · Indian Economy › External Sector & Balance Of Payments · Save

One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee. This is being advocated because

(a) convertibility of the rupee will stabilize its exchange value against major currencies of the world
(b) it will attract more foreign capital inflow in India
(c) it will help promote exports
(d) it will help India secure loans from the world financial markets at attractive terms
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Answer: (c) it will help promote exports
UPSC 1996 · Q37 · Indian Economy › International Trade & WTO · Save

The emerging trading blocs in the world, such as NAFTA, ASEAN and the like, are expected to

(a) act as constrictions in free trade across the world
(b) promote free trade on the lines laid down by the WTO
(c) permit transfer of technology between member countries
(d) promote trade in agricultural commodities between countries of the North and South
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Answer: (b) promote free trade on the lines laid down by the WTO
UPSC 1996 · Q40 · Indian Economy › International Trade & WTO · Save

Which of the following were the aims behind the setting up of the World Trade Organization (WTO)? I. Promotion of free trade and resource flows across countries. II. Protection of intellectual property rights. III. Managing balanced trade between different countries. IV. Promotion of trade between the former East Bloc countries and the western world.

Select the correct answer by using the codes given below:

(a) I, II, III and IV
(b) I and II
(c) II and III
(d) I and IV
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Answer: (b) I and II
UPSC 1996 · Q51 · Indian Economy › External Sector & Balance Of Payments · Save

Hawala transactions relate to payments

(a) received in rupees against overseas currencies and vice versa without going through the official channels
(b) received for sale/transfer of shares without going through the established stock exchanges
(c) received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment
(d) made to political parties or to individuals for meeting election expenses
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Answer: (a) received in rupees against overseas currencies and vice versa without going through the official channels
UPSC 1996 · Q56 · Indian Economy › Economic Planning & Five-Year Plans · Save

The Eighth Five-Year Plan is different from the earlier ones. The critical difference lies in the fact that

(a) it has a considerably larger outlay compared to the earlier plans
(b) it has a major thrust on agricultural and rural development
(c) considerable emphasis is placed on infrastructure growth
(d) industrial licensing has been abolished
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Answer: (d) industrial licensing has been abolished
UPSC 1996 · Q65 · Indian Economy › Agriculture & Rural Development · Save

In India, rural incomes are generally lower than the urban incomes.

Which of the following reasons account for this? I. A large number of farmers are illiterate and know little about scientific agriculture. II. Prices of primary products are lower than those of manufactured products. III. Investment in agriculture has been low when compared to investment in industry.

(a) I only
(b) I and II only
(c) I and III only
(d) I, II and III
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Answer: (a) I only
UPSC 1996 · Q70 · Indian Economy › National Income & Economic Growth · Save

Assertion (A): Though India’s national income has gone up several fold since 1947, there has been no marked improvement in the per capita income level.

Reason (R): Sizeable proportion of the population of India is still living below the poverty line. In the context of the above two statements which one of the following is correct?

(a) Both A and R are true and R is the correct explanation of A
(b) Both A and R are true but R is not a correct explanation of A
(c) A is true but R is false
(d) A is false but R is true
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Answer: (b) Both A and R are true but R is not a correct explanation of A
UPSC 1996 · Q87 · Indian Economy › International Trade & WTO · Save

Which one of the following sets of commodities are exported to India by arid and semi-arid countries in the Middle East?

(a) Raw wool and carpets
(b) Fruits and palm oil
(c) Precious stones and pearls
(d) Perfume and coffee
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Answer: (a) Raw wool and carpets
UPSC 1996 · Q89 · Indian Economy › International Institutions & Reports · Save

Consider the following statements: Most international agencies which fund development programmes in India on inter-governmental bilateral agreements mainly provide I. Technical assistance. II. Soft loans which are required to be paid back with interest. III. Grants, not required to be paid back. IV. Food assistance to alleviate poverty. Of these statements —

(a) I and IV are correct
(b) I, II and III are correct
(c) I, II and IV are correct
(d) III and IV are correct
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Answer: (b) I, II and III are correct
UPSC 1996 · Q95 · Indian Economy › International Trade & WTO · Save

Consider the following items imported by India: I. Capital goods II. Petroleum III. Pearls and precious stones IV. Chemicals V. Iron and Steel The correct sequence of these items (as per 1994-95 figures) in decreasing order of value is —

(a) I, II, III, IV, V
(b) I, II, IV, III, V
(c) II, I, III, IV, V
(d) II, I, IV, V, III
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Answer: (d) II, I, IV, V, III
UPSC 1996 · Q140 · Indian Economy › External Sector & Balance Of Payments · Save

The changing composition of the export trade is indicative of structural transformation of Indian economy in favour of modernisation. The best indicator of the trend is the

(a) relative share of petroleum products in exports
(b) decline in the share of agricultural products in exports
(c) constant share of ores and minerals in exports
(d) increase in the share of manufactured products in exports
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Answer: (d) increase in the share of manufactured products in exports