Nature of Indian Economy

Total Questions: 18

11. The Indian Economy can be described as : [U.P.P.C.S. (Mains) 2011]

(a) A backward and stagnant economy
(b) A developing economy
(c) An underdeveloped economy
(d) A developed economy

Correct Answer: (b) A developing economy

Solution:Indian economy is characterised as a developing economy.

The following features indicates that Indian economy is in a developing category-

• Low per capita income;

• Excessive dependence on agriculture (Occupation is mainly agriculture);

• High rate of population growth and over population;

• Existence of chronic unemployment and disguised unemployment;

• Poor rate of capital formation;

• Low level of technology;

• Poor quality of human capital;

• Lack of infrastructure;

• High level of poverty and inequality;

• Low industrial development;

• Market imperfections;

• Low level of living of an average Indian etc.

12. The Indian Economy is characterised by : [U.P. Lower Sub. (Spl.) (Pre) 2004]

I. Pre-dominance of Agriculture

II. Pre-dominance of Industry

III. Low per Capita Income

IV. Massive Unemployment

Select your answer from the codes given below :

(a) I and II only
(b) II , III & IV only
(c) I, II & III only
(d) I, III & IV only

Correct Answer: (d) I, III & IV only

Solution:Industrial dominance is an indication of developed economy. As India is a developing economy so industrial dominance is not one of its characteristics. Rest other indications are characteristics of Indian economy. A significant portion of the Indian workforce is engaged in agriculture and allied activities, and it contributes a substantial share to the national income. The average income per person in India is relatively low compared to other developed nations. There is a significant amount of unemployment in India, both in terms of open unemployment and disguised unemployment, particularly in rural area. While the industrial sector has grown over time, it is not the dominant sector in terms of employment or contribution to GDP compared to agriculture and the service sector.

13. Indian Economy is characterized as : [U.P.P.C.S. (Pre) 1995]

(a) Backward Economy
(b) Developed Economy
(c) Developing Economy
(d) Underdeveloped Economy

Correct Answer: (c) Developing Economy

Solution:Indian economy is characterized as a developing economy. In a developing economy there are changes in the framework of production, forms of production and also in the goods produced in it. Social relations also changes along with development. At present, economy of India is characterized as a middle income developing market economy. A "backward economy" is synonymous with an "underdeveloped economy". These terms describe economies with low levels of development, characterized by high poverty rates, low per capita income, limited industrialization, and outdated technology. They often rely heavily on agriculture and traditional methods of production.
Developed economies are characterized by high levels of per capita income, advanced infrastructure, and technological innovation. They have strong economies with substantial industrialization and efficient markets.

14. Which of the following is not a characteristics of Indian Economy ? [U.P.P.C.S. (Spl.) (Mains) 2004]

(a) Lower per capita income
(b) Lower per capita income
(c) Low rate or capital formation
(d) Lack of Natural Resources
(e) a & b

Correct Answer: (e) a & b

Solution:Lack of natural resources is not a feature of Indian Economy whereas rest three options are basic characteristics of Indian Economy. India is considered to be rich in natural resources, including land, water, minerals, forests, and power resources. However, challenges exist in terms of utilizing these resources effectively due to factors like inaccessible regions, outdated techniques, capital shortages, and small market sizes.

15. Which of the following is not an economic activity ? [U.P.P.C.S. (Pre) 2023]

(a) Voluntary Social Service
(b) Farming
(c) Transportation
(d) Service

Correct Answer: (a) Voluntary Social Service

Solution:An economic activity takes place when resources such as capital goods, labour, manufacturing techniques or intermediary products are combined to produce specific goods or services. Thus, an economic activity is characterised by an input of resources, a production process and an output of products (goods or services). Hence, farming, transportation and service are examples of economic activity.

As defined by the National Council of Social Service, a voluntary social service is interpreted generally as the organisation and activities of a self-governing body of people who have joined together voluntarily to study or act for betterment of the community. Therefore voluntary social service is not an economic activity.

16. Which of the following is a non-economic element in growth of the country ? [R.A.S./R.T.S. (Pre) 1996]

(a) Social Behaviour
(b) Natural resources
(c) Energy resources
(d) Capital resources

Correct Answer: (a) Social Behaviour

Solution:Non-economic elements in growth refer to factors that influence development but are not directly quantifiable in monetary terms or related to production and consumption of goods and services. They often pertain to the quality of human capital, institutional frameworks, and societal values.

Social Behaviour (including factors like work ethic, social cohesion, cultural values, education, health, and institutional stability) significantly impacts a country's ability to innovate, produce, and allocate resources effectively, thus fostering growth.
Natural resources, Energy resources, and Capital resources are all considered economic elements because they are directly involved in the production process and are quantifiable assets that contribute to a country's economic output.

17. Which of the following is not part of the 'Second Generation of Economic Reforms' identifies by the Government ? [U.P.P.C.S. (Mains) 2009]

(a) Oil Sector Reforms
(b) Public Sector Reforms
(c) Legal System Reforms
(d) Reform of Government and Public Institutions

Correct Answer: (c) Legal System Reforms

Solution:Among the above mentioned options, except the 'reform in judicial system' all other options are part of the Second Generation of Economic Reforms' identified by the Government. Thus option (c) is the correct answer. Second Generation Economic Reforms refer to a set of policy initiatives implemented in various economies, typically emerging markets or those undergoing transitions, to address structural weaknesses and further liberalize their economies. These reforms often follow initial lilberalization efforts and aim at deepening the economic transformation process.
The primary objectives of Second Generation Economic Reforms include:
Strengthening institutions: Enhancing governance frameworks, legal systems, and regulatory environments to foster a more conducive business climate,
Addressing inequality: Implementing policies to reduce income disparities, promote social inclusion, and ensure equitable access to economic opportunities,
Promoting innovation and entrepreneurship: Facilitating the development of a vibrant private sector, fostering innovation ecosystems, and encouraging entrepreneurship to drive economic growth.
Enhancing competitiveness: Implementing measures to improve productivity, upgrade infrastructure, and integrate into global value chains to enhance competitiveness on a global scale.

18. Indian model of development ensures interest of --- [U.P.U.D.A./L.D.A. (Pre) 2013]

(a) Person
(b) State
(c) State and Person both
(d) None of the above

Correct Answer: (c) State and Person both

Solution:India is a mixed type of economy. Under the mixed economy both public and private sector participate in the development of the country. The administration of public sector is state govern where the administration of private sector is in the hands of a person. Thus, the Indian model of development protect the interest of both the state and the individual. So the option (c) is the correct answer.

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