Structure of the Indian Economy & Demographics (Part-I)

Total Questions: 50

1. According to the 1991 Census, the highest percentage of population in India is to be found in the age group of: [1995]

(a) 60 years and above
(b) 35 to 55 years
(c) 25 to 34 years
(d) 5 to 14 years

Correct Answer: (d) 5 to 14 years

Solution:The highest percentage of population in India in 1991 is in the age group of 5-14 years.

India has one of the largest proportions of population in the younger age groups in the world. 35.3% of the population of the country has been in the age group 0-14 years at the Census 2001. 41% of the population account for less than 18 years of age.

2. Which of the following pairs are correctly matched? [1995]

1. Increase in Monetary expansion

2. Low import growth rate in India-Recession in Indian industry

3. Euro-issues-Shares held by Indian companies in European countries

4. Portfolio investment Foreign institutional investors.

Codes:

(a) 1, 2 & 4
(b) 3 & 4
(c) 1, 2 & 3
(d) 1, 2, 3 & 4

Correct Answer: (a) 1, 2 & 4

Solution:Euro issue includes issue of ADR (American Depositary Receipts) and GDR (Global Depositary Receipts). A scheme has been initiated during 1992 under which Indian companies are permitted to raise foreign currency resources through issue of Foreign Currency Convertible Bonds (FCCBs) and/or issue of ordinary equity shares through Global Depositary Receipts (GDRs)/American Depositary Receipts (ADRs) to foreign investors i.e. institutional investors or individuals (including NRIs) residing abroad.

3. Which one of the following is true regarding the Jawahar Rozgar Yojana (JRY)? [1995]

(a) It was launched during the Prime Ministership of Indira Gandhi
(b) It aims at creating one million jobs annually
(c) The target group of JRY are the urban poor living below the poverty line
(d) Under the scheme 30% of the employment generated is reserved for women

Correct Answer: (d) Under the scheme 30% of the employment generated is reserved for women

Solution:Though the people below the poverty line were the target group for employment, the preference was to be given to the Scheduled Castes, Scheduled Tribes and freed bonded labourers. Thirty percent of the employment opportunities were to be reserved for women in rural areas.

4. The Narasimham Committee for financial sector Reforms has suggested reduction in [1995]

(a) SLR and CRR
(b) SLR, CRR and Priority Sector Financing
(c) SLR and Financing to capital goods sector
(d) CRR, Priority Sector Financing and Financing to capital goods sector

Correct Answer: (b) SLR, CRR and Priority Sector Financing

Solution:Narasimham Committee for Financial Sector Reforms (1991) has suggested reduction in SLR, CRR and priority sector financing reducing it from 40% to 10%. Most of the suggestion of the committee were not implemented.

The purpose of the Narasimham Committee I was to study all aspects relating to the structure, organization, functions and procedures of the financial systems and to recommend improvements in their efficiency and productivity. The Narasimham Committee II was tasked with the progress review of the implementation of the banking reforms since 1992 with the aim of fürther strengthening the financial institutions of India. It focussed on issues like size of banks and capital Adequacy ratio among other things.

5. Corporation tax: [1995]

(a) is levied and appropriated by the States.
(b) is levied by the Union and collected and appropriated by the States.
(c) is levied by the Union and shared by the Union and the States.
(d) is levied by the Union and belongs to it exclusively.

Correct Answer: (d) is levied by the Union and belongs to it exclusively.

Solution:Corporation tax is a direct tax levied, collected and appropriated by the Union or the central government. No part of this tax can be assigned to the states.

6. One of the reasons for India's occupational structure remaining more or less the same over the years has been that: [1995]

(a) investment pattern has been directed towards capital intensive industries.
(b) productivity in agriculture has been high enough to induce people to stay with agricultural.
(c) ceiling on land holdings have enabled more people to own land and hence their preference to stay with agriculture.
(d) people are largely unaware of the significance of transition from agriculture to industry for economic development.

Correct Answer: (a) investment pattern has been directed towards capital intensive industries.

Solution:Our economic planners are not emphasizing development of small scale industries in their plan strategies.

7. The main reason for low growth rate in India, inspite of high rate of savings and capital formation is: [1995]

(a) high birth rate
(b) low level of foreign and
(c) low capital output ratio
(d) high capital output ratio

Correct Answer: (d) high capital output ratio

Solution:Capital output ratio is the amount of capital needed to produce one unit of output.
It explains the relationship between level of investment and the corresponding economic growth lower capital output ratio Shows productivity of capital and technological progress.

8. Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India? [1996]

(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 complimentary 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 adjacent is to be set it motion by the State governments

Correct Answer: (a) Stabilization is a gradual, multi-step process while structural adjustment is a quick adaptation process

Solution:New Economic Policy was adopted in 1991 based on Rao-Manmohan model. Stabilization component of any economy is essentially a short-term programme while the structural readjustment component is a long term process.

9. One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee. This is being advocated because: [1996]

(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 to promote exports
(d) it will help India secure loans from the world financial markets at attractive terms

Correct Answer: (a) convertibility of the rupee will stabilize its exchange value against major currencies of the world

Solution:The full convertibility of the Indian currency means that the rupee is freely exchangeable into other international currencies and vice versa. Also, this would mean that international investors can buy and sell Indian assets at will. After 1994, the rupee has been partially convertible which means that the currency is changed freely into foreign currency for business and trade expenses. But it cannot be converted freely for acquiring overseas assets. Experts feel full convertibility of rupee would facilitate growth and higher foreign investments.

10. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R): [1996]

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 & R are true & R is the correct explanation of A
(b) Both A & 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
(d) None of these

Correct Answer: (b) Both A & R are true but R is not a correct explanation of A

Solution:There is no relation between the proportion of population of India living below the poverty line and Increase in India's national income.

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