5 - Economy

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INTRODUCTION

The Economy of India is the ninth largest in the world by nominal

GDP and the third largest by purchasing power parity (PPP). Theindependence-era Indian economy before and a little after 1947was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private

participation characterising it, leading to massive inefficienciesand widespread corruption. However, later on India adopted freemarket principles and liberalised its economy to international trade.Following these strong economic reforms, the country's economicgrowth progressed at a rapid pace with very high rates of growthand large increases in the incomes of people.India recorded the highest growth rates in the mid-2000s, and isone of the fastest-growing economies in the world. The growthwas led primarily due to a huge increase in the size of the middleclass consumer, a large labour force and considerable foreigninvestments. India is the fourteenth largest exporter and eleventhlargest importer in the world.Recently India has become one of the most attractive destinationsfor investment owing to favourable government policies and reforms. The approval of Foreign Direct Investment (FDI) inseveral sectors have allowed investments to pour into theeconomy. According to the data provided by Department of Industrial Policy and Promotion (DIPP), the cumulative amount

of FDI inflows in the country in the period April 2000-September 2014 was US$ 345,073 million.

Growth in India was expected to rise to 5.6 per cent in 2014 and pick up further to 6.4 per cent in 2015 as both exports and investment was expected to increase, according to the World Economic Outlook (WEO) report released by InternationalMonetary Fund (IMF).Sectors projected to do well in the coming years includeautomotive, technology, life sciences and consumer products.Engineering and research and development (ER&D) exportrevenue from India is expected to reach US$ 37-45 billion by 2020,from an estimated US$ 12.4 billion in FY14.Furthermore, the US$ 1.2 trillion investment that the governmenthas planned for the infrastructure sector in the 12th Five-Year Plan is set to help in further improving the export performance of

Indian companies and the Indian growth story, which will

consequently improve the overall Indian economy.

ECONOMY TYPES

An economy is a system whereby goods are produced and

exchanged. Without a viable economy, a state will collapse. There

are three main types of economies: free market, command, and

mixed. The chart below compares free-market and command

economies; mixed economies are a combination of the two.

Free-Market Versus Command Economies

Free-Market Economies Command Economies

Usually occur in democratic Usually occur in communist or

states authoritarian states

Individuals and businesses The state's central government

make their own economic makes all of the country's

decisions. economic decisions.

FREE-MARKET ECONOMIES

In free-market economies, which are essentially capitalist

economies, businesses and individuals have the freedom to pursue their own economic interests, buying and selling goodson a competitive market, which naturally determines a fair price

for goods and services.

COMMAND ECONOMIES

A command economy is also known as a centrally planned economy

because the central, or national, government plans the economy.

Generally, communist states have command economies, although

China has been moving recently towards a capitalists economy. In

a communist society, the central government controls the entire

economy, allocating resources and dictating prices for goods and

services. Some non communist authoritarian states also have

command economies. In times of war, most states-even democratic,free-market states-take an active role in economic planning but not

necessarily to the extent of communist states.

MIXED ECONOMIES

A mixed economy combines elements of free-market and command

economies. Even among free-market states, the government

usually takes some action to direct the economy. These moves

are made for a variety of reasons; for example, some are designed

to protect certain industries or help consumers. In economic

language, this means that most states have mixed economies.

With the induction of liberalisation, Licence Raj was abolished,

ended public monopolies which allowed automatic approval of

foreign direct investment in various sectors. India has becomeone of the fastest-growing developing economies since 1990. It

is projected that in 2035, India will be the third largest economy ofthe world after US and China. India has taken a drift from its

earlier stand of Mixed Economies.

ECONOMY SECTORS

Primary Sector: When the economic activity depends mainly

on exploitation of natural resources then that activity comes under

the primary sector. Agriculture and agriculture related activities

are the primary sectors of economy.

ECONOMY

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The Indian agriculture sector accounts for 18 per cent of India's

Gross Domestic Product (GDP) and employs just a little less than

50 per cent of the country's workforce. This sector has made

considerable progress in the last few decades with its large

resources of land, water and sunshine. India is presently the

world's largest producer of pulses and the second largest producer

of rice and wheat.

Secondary Sector: When the main activity involves

manufacturing then it is the secondary sector. All industrial

production where physical goods are produced come under the

secondary sector.

In the secondary sector of the national economy, natural

ingredients are used to create products and services that are

consequently used for consumption. This sector can be regarded

as one that adds value to the products and services on offer.

Examples: The major examples of this sector are manufacturing

and transporting.

Employment generation:The various industries in India employ

almost 14 per cent of the aggregate workforce in the country.

Economic contribution: The secondary sector of Indian

economy contributes almost 28 per cent of the GDP. Global

standing: India occupies the 12th spot in the world when it comesto nominal factory production in real terms.

Tertiary Sector: When the activity involves providing intangible

goods like services then this is part of the tertiary sector. Financial

services, management consultancy, telephony and IT are good

examples of service sector.

Global standing: With regards to output in the services sector,

India occupies the 13th spot in the world.

Employment generation:It employs approximately 23 per cent of

the Indian workforce

Yearly growth rate: The tertiary economic sector of India has a

yearly growth rate of almost 7.5 per cent.

Economic contribution: This sector accounts for almost 55 per cent of India's GDP.

The main difference between the private and public sectors of

Indian economy is that in the later a group of individuals or an

individual holds the rights to the properties whereas in the second

instance the government is the owner.

Employment Generation: In India there are approximately 487

million workers, a number preceded only by China. 94 per cent of

this workforce is employed in the companies that belong to the

unorganised sector and this includes gems and diamond polishing

entities to pushcart sellers.

The organised sector is mostly made of workers that are employed

in the public sector companies. Of late the scales are slowly tipping

in the favour of the private sector with a lot of Indians startingtheir businesses and international entities coming into the

country.

NEW ECONOMIC POLICY

The new economic policy 1991 was introduced to revive the

economy. It emphasised a bigger role for Private sector. It focused

on FDI on supplement growth. It aimed at export led growth along

with reducing the role of state and making planning liberal and

market driven.

The main characteristics of new Economic Policy 1991 are:

1. Delicencing:Only six industries were kept under Licencing

scheme. The private sectors were allowed to set up industrial

units without taking any licences. Industrial licensing was

abolished for almost all but product categories.

2. Entry to Private Sector: The role of public sector was

limited only to four industries; rest all the industries were

opened for private sector also.

3. The threshold limit of assets in respect of MRTP companies

and other major undertakings was abolished. They werefree to undertake investments without any ceiling prescribed

by MRTP.

4. Disinvestment: Disinvestment was carried out in many

public sector enterprises.

5. The role of RBI reduced from regulator to facilitator of

financial sector. This means that the financial sector may be

allowed to take decisions on many matters without

consulting the RBI. The reform policies led to the

establishment of private sector banks, Indian as well as

foreign. Foreign investment limit in banks was raised to

around 50 per cent.

6. Liberalisation of Foreign Policy: The government granted

approval for FDI up to 51per cent in high priority areas.7. In 1991 the rupee was devalued against foreign currencies

This led to an increase in the inflow of foreign exchange.

8. Liberalisation in Technical Area: Automatic permission

was given to Indian companies for signing technology

agreements with foreign companies.

9. Setting up of Foreign Investment Promotion Board (FIPB)

This board was set up to promote and bring foreign

investment in India.

10. Sick public sector units were recommended to Board for

Industrial and Financial Reconstruction (BIFR) for revival.

11. Setting up of Small Scale Industries:Various benefits were

offered to small scale industries.

12. PSU were given more autonomyThere are three major components or elements of new economic

policy—Liberalisation, Privatisation, Globalisation.

SALIENT FEATURES OF INDIAN ECONOMY

The economy of India is the tenth-largest in the world by nominal

GDP and the third-largest by purchasing power parity (PPP). India

was 6th largest exporter of services and 19th-largest exporter of

merchandise in 2013. It is the 12th-largest merchandise and 7th

largest services importer. Agriculture sector is the largest employer

in India's economy but contributes a declining share of its GDP

(13.7% in 2012-13). Its manufacturing industry has held a constant

share of its economic contribution, while the fastest-growing part

of the economy has been its services.

GROWTH INDICATORS

The growth and performance of the Indian economy is explained

in terms of statistical information provided by the various

economic parameters. Gross National Product (GNP), Gross

Domestic Product (GDP), Net National Product (NNP), per capita

income are the various indicators relating to the national income

sector of the economy. They provide a wide view of the economy

including its productive power for satisfaction of human wants.

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In the industrial sector, the Index of Industrial Production (IIP) is

a single representative figure to measure the general level of

industrial activity in the economy. It measures the absolute level

and percentage growth of industrial production.

The four main monetary aggregates of measures of money supply

which reflect the state of the monetary sector are:- (i) M1 (Narrow

money) = Currency with the public + demand deposits of the

public; (ii) M2 = M1 + Post Office Savings deposits; (iii) M3

(Broad money) = M1 + time deposits of the public with banks;

and (iv) M4 = M3 + Total post office deposits.

Price movement in the country is reflected by the Wholesale

Price Index (WPI) and the Consumer Price Index (CPI).

WPI is used to measure the change in the average price level of

goods traded in the wholesale market, while the Consumer Price

Index (CPI) captures the retail price movement for different sections

of consumers.

INDIA AS DEVELOPING COUNTRY

Indian economy has over the decades shown marked

improvements. Few facts of relevance are:

(i) Rise in National Income: India's national income i.e. Net

National Product (NNP) at factor cost (National Income)

has increased by about 17 times over a period of about 6

decades. On an average, the NNP has increased at a rate of

a little less than 5 per cent per annum.

(ii) Rise in Per Capita Income: Per capita income in India has

increased by more than 4 times over a period of about six

decades. If we consider the period 1950-51 to 1990-91, the

rate of increase in per capita NNP was roughly 1.6 per cent

per annum. Since 1990-91, the per capita income shows an

uptrend. It has increased roughly at a rate of about 5.5 per

cent per annum .

INDIA AS MIXED ECONOMY

In India, we observe that the following characteristics exist:(1) Private ownership of means of production- Agriculture and

most of the industrial and services sectors are in the private

hands.

(2) Important role of market mechanism- Market forces of

demand and supply have free role in determining prices in

various markets. Government regulations and control over

period of time have reduced a lot.

(3) Presence of a large public sector along with free enterprise-

After Independence, the government recognised the need

to provide infrastructure for the growth of the private sector.

Also, it could not hand over strategic sectors like arms and

ammunition, atomic energy, air transport etc., to the privatesector. So public sector was developed on a large scale

(4) Economic planning - Economic planning has been an

integrated part of the Indian Economy. The Planning

Commission lays down overall targets for the economy as a

whole, for public sector and even for the sectors which are

in the private hands like agriculture. The government tries

to achieve the laid down targets by providing incentives to

these sectors. Thus, here planning is only indicative in

nature and not compulsive.

INDIAN FINANCIAL SYSTEM

Financial system operates through financial markets and

institutions.

The Indian Financial system (financial markets) is broadly divided

under two heads:

(i) Indian Money Market

(ii) Indian Capital Market

The Indian money market is the market in which short-term funds

are borrowed and lent. The money market does not deal in cash,

or money but in bills of exchange, grade bills and treasury bills

and other instruments. The capital market in India on the other

hand is the market for the medium term and long term funds.

Generally the investors are called surplus units and business

enterprises are called deficit units. So financial market transfers

money supply from surplus units to deficit units. Financial market

acts as a link between surplus and deficit units and brings together

the borrowers and lenders.

There are mainly two ways through which funds can be allocated,

(a) Via bank (b) Financial markets. The households who are the

surplus units may keep their savings in banks; they may buy securities

from capital market. The banks and financial market both in turn lend

the funds to business firm which is called deficit unit.

Bank and financial market are competitor of each other. Financialmarket is a market for the creation and exchange of financial assets.

FUNCTIONS OF FINANCIAL MARKETS

Financial markets perform following four important functions:

1. Mobilisation of Savings and Channelising them into most

Productive use: Financial markets act as a link between

savers and investors. Financial markets transfer savings of

savers to most appropriate investment opportunities.

2. Facilitate Price Discovery: Price of anything depends upon

the demand and supply factors. Demand and supply of

financial assets and securities in financial markets help in

deciding the prices of various financial securities.

3. Provide Liquidity to Financial Assets: In financial marketsfinancial securities can be bought and sold easily so

financial market provides a platform to convert securities in

cash.

4. Reduce the Cost of Transaction: Financial market provides

complete information regarding price, availability and cost

of various financial securities. So investors and companies

do not have to spend much on getting this information as it

is readily available in financial markets.

NATIONAL INCOME

National income is the final outcome of all economic activities of

a nation valued in terms of money. Economic activities include all

human activities which create goods and services that can be

valued at market price. Economic activities include agricultural

production, industrial production, production of goods and

services by the government enterprises, and services produced

by business intermediaries etc. On the other hand, non-economic

activities are those which produce goods and services that do

not have any economic value. Thus, national income may also be

obtained by adding the factor earnings and adjusting the sum for

indirect taxes and subsidies. The national income thus obtained

is known as national income at factor cost. It is related to money

income flows.

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MEASURES OF NATIONAL INCOME

Gross National Product (GNP): It is the most comprehensive

measure of the nation's productive activities. The GNP is defined

as the value of all final goods and services produced during a

specific period, usually one year, plus incomes earned abroad by

the nationals minus incomes earned locally by the foreigners.

The GNP is identical to Gross National Income (GNI). Thus, GNP

= GNI. The difference between them is only of procedural. While

GNP is estimated on the basis of product-flows, the GNI is

estimated on the basis of money income flows, (i.e., wages, profits,

rent, interest, etc.)

GROSS DOMESTIC PRODUCT (GDP)

The Gross Domestic Product (GDP) is defined as the market value

of all final goods and services produced in the domestic economy

during a period of one year, plus income earned locally by the

foreigners minus incomes earned abroad by the nationals. TheGDP is similar to GNP with procedural difference. In case of GNPthe incomes earned by the nationals in foreign countries are added and incomes earned locally by the foreigners are deducted fromthe market value of domestically produced goods and services.

In case of GDP, the process is reverse - incomes earned locally by

foreigners are added and incomes earned abroad by the nationalsare deducted from the total value of domestically produced goodsand services.

ECONOMIC PLANNING IN INDIA

Economic planning in India was started in 1950 is necessary for economic development and economic growth. Economic Planningis a term used to describe the long term plans of government toco-ordinate and develop the economy. Economic Planning is tomake decision with respect to the use of resources.Need For Economic Planning: Social and Economic problemcreated by partition of Country.Objectives: Reduction of Unemployment, Modernisation,

Balanced Regional Development, Reduction of Economic in

Equalities, Economic Growth

OVERVIEW

The Indian economy still depends on the agricultural sector. Aboutone-third of its national income is derived from agriculture and itsallied sectors employing about two-third of the work force.Given below are the organisations and concepts associated withour economy:

The Department of Statistics in the Ministry of Planning and Programme Implementation is the apex body in the official statisticsystem of the country.The Department consists of:(i) Central Statistical Organisation (CSO) which is

responsible for formulation and maintenance of statistical

standard, work pertaining to national accounts, conduct of economic census and surveys, training in official statistics,coordination of statistical activities.

(ii) National Survey Organisation which was set up in 1950

with a programme of conducting large-scale surveys to

provide data for estimation of national income and related

aggregates for planning and policy formulation. It was

reorganised in 1970 by bringing together all aspects of

survey work into a single unified agency known as National

Sample Survey Organisation.

Ministry of Finance is responsible for the administration of the

finance of the government. It is concerned with all economic and

financial matters affecting the country.

This Ministry comprises four departments, namely:

(a) Economic Affairs

(b) Expenditure(c) Revenue

(d) Company AffairsThe Department of Economic Affairs consists of eight main

divisions:(i) Economic

(ii) Banking

(iii) Insurance(iv) Budget

(v) Investment

(vi) External Finance

(vii) Fund bank

(viii) Currency and coinage.This Department inter alia monitors current economic trends and

advises the government on all matters of internal and externaleconomic management.

Public Finance: The power to raise and disburse public funds

has been divided under the constitution between union and StateGovernment. Sources of revenue for Union and States are by

large mutually exclusive if shareable taxes are excluded.All receipts and disbursement of the Union are kept under two

separate headings namely:(a) Consolidated Fund of India and (b) Public Account of India.

All the revenues received, loans raised and money received in

repayment of loans by the Union form the Consolidated Fund. No money can be withdrawn from this fund except by an Act of

Parliament. All other receipts go to public accounts anddisbursements. These are not subject to the vote of Parliament.

To meet unforeseen needs not envisaged in the AnnualAppropriation Act, a Contingency Fund has been established.

These three are in each state also.Sources of Revenue: The main sources of the Union tax revenueare Custom duties, Union excise duties, Corporate and Income

taxes, non-tax revenues comprise interest receipts, includinginterest paid by the railways, telecommunications dividends and

profits.

The main heads of revenue in the states are taxes and dutieslevied by the respective state governments, shares of taxes levied

by the Union and grants received from the Union Property taxes,octroi and terminal taxes are the mainstay of local finance.

Public Debt: It includes internal debt comprising borrowing insidethe country like market loans, compensations and other bonds,

treasury bills issued to the RBI State Governments, Commercial

banks as well as non-negotiable non-interest bearing rupees

securities issued to the international financial institutions and

external debt comprising loans from foreign countries and

international financial institutions.

PLANNING COMMISION REPLACES THE NITI AAYOG

The Planning Commission was set up on the 15th of March, 1950

through a Cabinet Resolution. Nearly 65 years later, the country

has metamorphosed from an under-developed economy to an

emergent global nation with one of the world's largest economies

In the context of governance structures, the changed requirements

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of our country, point to the need for setting up an institution that

serves as a Think Tank of the government - a directional and

policy dynamo. The proposed insti tution has to provide

governments at the central and state levels with relevant strategic

and technical advice across the spectrum of key elements of

policy. This includes matters of national and international import

on the economic front, dissemination of best practices from within

the country as well as from other nations, the infusion of new

policy ideas and specific issue-based support. The institution

has to be able to respond to the changing and more integrated

world that India is part of. An important evolutionary change

from the past will be replacing a centre-to-state one-way flow of

policy by a genuine and continuing partnership with the states.

We need to find our own strategy for growth. The new institution

has to zero in on what will work in and for India. It will be a

Bharatiya approach to development.

DIFFERENCE BETWEEN THE NITI AAYOG AND

PLANNING COMMISSION

Under the Planning Commission centre-to-state one-way flow of

policy existed, whereas, the NITI Aayog has planned a genuine

and continuing partnership of states. Now, state governments

can play an active role in achieving national objectives, as theyhave been empowered to provide with strategic and technical

advice across the spectrum of policymaking.

The institution to give life to these aspirations is the NITI Aayog

(National Institution for Transforming India). This is being

proposed after extensive consultation across the spectrum of

stakeholders including inter alia state governments, domain

experts and relevant institutions.

COMPOSITION

Chairperson: Prime Minister.

Governing Council: It will consist of Chief Ministers (of States)

and Lt. Governors (of Union Territories).

Regional Council: It will be formed on need basis. It willcompromise Chief Ministers (of States) and Lt. Governors (of

Union Territories).

Vice-Chairperson:To be appointed by the Prime Minister.

Members: Full time Basis.

Part time members: Maximum of 2. They will from leading

universities research organisations and other relevant institutions

on a rotational basis.

Ex Officio members: Maximum of 4 members of the Union Council

of Ministers to be nominated by the Prime Minister.

Special invitees: They will be nominated by the Prime Minister

and will be experts, specialists and practitioners with relevant

domain knowledge as special invitees.Chief Executive Officer: Appointed by the Prime Minister for a

fixed tenure, in the rank of Secretary to the Government of India.

Secretariat: If deemed necessary.

The NITI Aayog will work towards the following objectives:

(a) To evolve a shared vision of national development priorities,sectors and strategies with the active involvement of States

in the light of national objectives. The vision of the NITIAayog will then provide a framework 'national agenda' for the

Prime Minister and the Chief Ministers to provide impetus to

(b) To foster cooperative federalism through structured support

initiatives and mechanisms with the States on a continuous

basis, recognizing that strong States make a strong nation

(c) To develop mechanisms to formulate credible plans at the

village level and aggregate these progressively at higher levels

of government

(d) To ensure, on areas that are specifically referred to it, that the

interests of national security are incorporated in economic

strategy and policy

(e) To pay special attention to the sections of our society thatmay be at risk of not benefitting adequately from economic

progress

(f) To design strategic and long term policy and programme

frameworks and initiatives, and monitor their progress and

their efficacy. The lessons learnt through monitoring and

feedback will be used for making innovative improvements,

including necessary mid-course corrections g. To provide

advice and encourage partnerships between key stakeholders

and national and international likeminded Think Tanks, as

well as educational and policy research institutions h. To create

a knowledge, innovation and entrepreneurial support system

through a collaborative community of national and

international experts, practitioners and other partners i. Tooffer a platform for resolution of inter-sectoral and inter-

departmental issues in order to accelerate the implementation

of the development agenda

(j) To maintain a state-of-the-art Resource Centre, be a repository

of research on good governance and best practices in

sustainable and equitable development as well as help their

dissemination to stake-holders

(k) To actively monitor and evaluate the implementation of

programmes and initiatives, including the identification of the

needed resources so as to strengthen the probability of

success and scope of delivery

(l) To focus on technology upgradation and capacity building

for implementation of programmes and initiatives(m) To undertake other activities as may be necessary in order to

further the execution of the national development agenda,

and the objectives mentioned above

FUNCTIONS THAT WILL BE UNDERTAKEN BY THE

NITI AAYOG

• It will develop mechanisms for formulation of credible plans

to the village level and aggregate these progressively at

higher levels of government

• Special attention will be given to the sections of the society

that may be at risk of not benefitting adequately from

economic progress

• It will also create a knowledge, innovation andentrepreneurial support system through a collaborative

community of national and international experts,

practitioners and partners

• It will offer a platform for resolution of inter-sectoral and

inter-departmental issues in order to accelerate the

implementation of the development agenda

• It will also monitor and evaluate the implementation of

programmes, and focus on technology upgradation and

capacity building.

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IMPORTANT POINTS TO REMEMBER

• First Industrial Resolution Policy in India - 1948

• New Industrial Policy - 1991• Planning Commission was set up in - 1950

• First Five year plan started from - 1951

• Major aim of planning - To improve standards of living of people• Removal of Poverty (Garibi Hatao) - 4th Five Year Plan (Indira

Gandhi)

ECONOMIC PLANNING IN INDIA• General Objectives :

• To improve national income and raise the standard of livingin the country.

• To attain rapid industrialization with an emphasis on basic

and heavy industries.• To create and expand employment opportunities.

• To ensure distributional justice through reduction ininequalities in income and wealth.

• To increase employment opportunities.

• Economic planning is the method of allocating resources(physical and human) among different uses in order of

preferences and the detailed scheme prepared for that is

called as the economic plan.• Bombay Plan, aimed at doubling the per capita income in the

next 15 years, was prepared by eight noted businessmen of

the country in 1943.

• People’s Plan was prepared by Shri M N Roy in April, 1945.

• Gandhian Plan was prepared by Shriman Narayan in 1944.

• Sarvodaya Plan was prepared by Shri Jaiprakash Narayanin January, 1950.

NATIONAL INCOME IN INDIA

• The first attempt to estimate the National income of India

was made 1868 by Dadabhai Naoroji in his book ‘Povertyand Un-British Rule in India.’

• The first scientific estimate of National Income of India was

made by Dr. V K R V Rao.

FIVE YEAR PLANS

1st Plan: 1951-56

• Priority giving toAgriculture and Irrigation.

• “Harrod Domar” growth model adopted.• This is the only plan in which Prices Fell.

2nd Plan: 1956-61

• PC Mahalanobis prepared this Plan. Priority given to basicand heavy industries.

• Bhilai, Rourkela and Durgapur Steel Plants, ONGC, Ranchi

Heavy Engg. Corporation, Neyveli Lignite Corporation,

Multi-purpose projects - Nagarjuna Sagar, Bhakra Nangal,Hirakud started during this Plan.

• Deficit financing started in this plan.

• “Socialist pattern of society” is accepted as a goal.

3rd Plan : 1961-66

• This plan was a failure. Food output fell, i.e., became negative.

• Bokaro Steel Plant in 1964.

• Sever drought in 100 years, occurred in 1965-66.

• China’s and Pakistan’s innovations.

• Rupee devalued in June 1966 (devaluation was first done in

1949).

DURING 1966-69: THREE ANNUAL PLANS, PLAN HOLIDAY

• Green Revolution in 1966 Kharif.

• 14 Banks nationalized in July 1969

4th Plan - Aim : 1969-74

• Poverty Removal, Growth with stability with distributive

justice, self-reliance

• Gadgil Formula : It was followed since 4th plan for central

assistance for state plans. This formula was modified by

NDC in Dec. 1991 when Pranab Mukherjee was the Chairman

of Planning Commission. Hence, it became Gadgil -

Mukherjee formula since 8th Plan : “Planning from below”

started from 4th Plan.

• “Garibi Hatao” slogan in 1971 Elections

• Privy purses were abolished in 4th Plan

5th Plan - Aim : 1974-79

• Poverty removal became distinct objective for the first time.

DP Dhar drafted.• “Minimum Needs Programme” launched.

• Command Area Development Programme was started in1974-75 to utilise water in major and medium irrigation projectsin an optimum manner.

• Oil crisis : 1973 Sept.• 20 point programme replaced 5th plan discontinued 1 year in

advance.

6th Plan: 1978-83

• Proposed by Janata Party but it was defeated in electionsand could implement Rolling Plan for 2 years for 1978-80.Prof. DT Lakdawala was the Dy. Chairman, PlanningCommission.

• The idea “Rolling Plan” was taken from Japan.• “Rolling Plan” concept coined by Gunnar Myrdal.

• “Hindu rate of Growth” crossed from 5th plan. This conceptwas coined by Prof. Raj Krishna (Growth Rate 3% to 3.5%)

6th Plan: Aim 1980-85

• Poverty eradication.• IRDP, TRYSEM, NREP launched during this Plan.• Visakhapatnam Steel Plant (Andhra Pradesh), Salem (Tamil

Nadu) Bhadravathi Steel Plants were built.

7th Plan: 1985-90

• Food, Work, Productivity, “Jawahar Rozgar Yojana”launched in April 1989’.

• Vakil and Brahmananda’s wage good strategy adopted inthe 7th Plan.

8th Plan : 1992-97

• Indicative planning : Based on the model of John.W.Muller

• This plan achieved highest growth rate of 6.8%.

• “Indicative planning” implemented first in France in

1947–50.

9th Plan - Aim : 1997-2002

• Human resources development, growth with social justice

and equality agricultural rural development, important role

to private sector.

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10th Plan: 2002-07

• Growth rate target 87%, achieved 7.8%

• Highest in the entire planning era : 5 crore employment, largest

allocation to energy.

11th Plan : 2007-12

• Theme : “Faster and more Inclusive Growth”

• Total proposed outlay : ` 36,44,718 Crores (doubled)

• Union Government ̀21,56,571 Crores (59.2%).

• States ̀14,88,147 Crores (40.8%).

• Approach paper to 11th Plan approved by the Planning

Commission on 18-10-2006.

• 52nd National Development Council approved the Draft Plan

on 09-12-2006.

• 54th National Development Council approved in its meeting

on 19-12-2007

• 55th National Development council meet held on 24-07-2010.

• Central Gross Budgetary Support. ` 14,21,711 Crores.

• This is centre’s support to plan.

• Midterm Review of the 11th plan is done by Planning

Commission on 23-03-2010, and the 11th plan growth targetis reduced from 9% to 8.1%. (It projects the growth rate for

20-09-10, 20-10-11, 20-11-12 as 7.2%, 8.5% and 9%

respectively. Also to increase the outlay on infrastructure

sector from the present $ 500 billion in 11th Plan to $ 1 Trillion

in 12th Plan).

12th Plan : 2012-17

• This plan’s focus is on instilling “inclusive growth”.

• The plan is concentrated to encourages the development of

India’s agriculture, education, health and social welfare

through government spending.

• It is also expected to create employment through developing

India’s manufacturing sector and move the nation higher up

the value chain.

• Our PM Manmohan Singh, however, warned that

maintaining fiscal discipline is important as well.

FINANCE COMMISSION OF INDIA

A finance commission is set up every five years by the President

under Article 280 of the Constitution. Finance Commission of

India came into existence in 1951.

It was formed to define the financial relations between the

centre and the state. These recommendations cover a period of

five years.

The commission also lays down rules by which the centre should

provide grants-in-aid to states out of the Consolidated Fund of

India. It is also required to suggest measures to augment the

resources of states and ways to supplement the resources of

panchayats and municipalities.

Composition of the Fourteenth Finance Commission

The Fourteenth Finance Commission has been set up under the

Chairmanship of Dr. Y.V.Reddy [Former Governor Reserve Bank

of India].

Other Members of the Commission are:

(i) Ms. Sushma Nath [Former Union Finance Secretary],

(ii) Dr. M.Govinda Rao [Director, National Institute for Public

Finance and Policy, New Delhi].

(iii) Dr. Sudipto Mundle, Former Acting Chairman, National

Statistical Commission.

(iv) Prof Abhijit Sen (Member, Planning Commission) is the part-

time Member of the Fourteenth Finance.

(v) Commission. Shri Shri Ajay Narayan Jha is the Secretary,Fourteenth Finance Commission.

Qualifications of the Members

The Chairman of the Finance Commission is selected among

people who have had the experience of public affairs. The other

four members are selected from people who:

1. Are, or have been, or are qualified, as judges of High Court, or

2. Have knowledge of Government finances or accounts, or

3. Have had experience in administration and financial expertise;

or

4. Have special knowledge of economics

Procedure and Powers of the Commission: The Commission

has the power determine their own procedure and:

1. Has all powers of the civil court as per the Court of CivilProcedure, 1908.

2. Can summon and enforce the attendance of any witness or

ask any person to deliver information or produce a document,

which it deems relevant.

3. Can ask for the production of any public record or document

from any court or office.

4. Shall be deemed to be a civil court for purposes of Sections

480 and 482 of the Code of Criminal Procedure, 1898.

Tenure of the 14th Finance Commission: The Finance

Commission is required to give its report by 31st October, 2014.

Its recommendations will cover the five year period commencing

from 1st April, 2015.

Naars imha n Co mmittee I-II Banking Sector Re forms

S.P. Gup ta Committee Unemp lo ymen t

Onkar Goswami Committee Industrial Sickness

Abid Hussian Committee Small Scale Industries

Shankar Lal Guru Committee Agricultural Marketing

Malhotra Committee Insurance

Rakesh Mohan Committee Infrastructure

Khan Committee Universal Banking

Bh an dari Co mmittee Res tructu rin g of Ru ral Ban ks

Chalayia Committee Tax Reforms

N.K. Singh Committee Foreign Direct Inves tment

Janki Ram Committee Share Scam

Ran grajan Co mmittee Balan ce o f Paymen ts

Y V Red dy Committe e A dmin is te re d In tere st Ra te

MS Ahluwalia (Task Force) Employment Opportunities

M ee ra Seth Co mmitt ee Han dlo om (Ta xtile )

Abhijeet Sen Commit tee Grain Policy

Some Important Committees

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Financial Institution Year of Establishment

Reserve Bank of India (RBI) April 1, 1935

Industrial Finance Corporation of India (IFCI) 1948

State Bank of India (SBI) July 1, 1955

Unit Trust of Inida (UTI) February 1, 1964

Industrial Development Bank of India (IDBI) July, 1964

National Bank for Agriculture and Rural Development (NABARD) July 12, 1982

Small Indus tries Development Bank of India (SIDBI) 1990

Export-Import Bank of India (EXIM Bank) January 1, 1982

National Hous ing Bank (NHB) July, 1988

Life Insurance Corporation (LIC) September, 1956

General Insurance Corporation (GIC) November, 1972

Regional Rural Banks (RRB) March, 1975

Housing Development Finance Corporation Ltd. (HDFC) 1977

Important Financial Institutions of India

S.N. Programme Year of Begining1 Community Development Programme (CDP) 1952

2 Intensive Agriculture Development Programme (IADP) 1960-61

3 Green Revolution 1966-67

4 Drought-Prone Area Programme (DPAP) 1973

5 Command Area Development Programme (CADP) 1974-75

6 Desert Development Programme (DDP) 1977-78

7 Food for Work Programme 1977-78

8 Antyodaya Yojana 1977-78

9 Training Rural Youth for Self Employment (TRYSEM) Aug 15, 1979

10 Integrated Rural Development Programme (IRDP) Oct 2, 1980

11 Development of Women and Children in Rural Areas (DWCRA) Sept, 1982

12 Rural Landless Employment Gurantee Programme (RLEGP) Aug 15, 1983

13 Jawahar Rozgar Yojana Apr, 1989

14 Nehru Rozgar Yojana Oct, 1989

15 Employment As surance Scheme (EAS) Oct 2, 1993

16 Members of Parliament Local Area Development Scheme (MPLADS) Dec, 1993

17 Swarna Jayanti Shahari Rozgar Yojana (SJSRY) Dec, 1997

18 Annpurna Yojana Mar, 1999

19 Swarna Jayanti Gram Swarozgar Yojana (SGSY) Apr, 1999

20 Jawahar Gram Samriddhi Yojana (JGSY) Apr, 1999

21 Pradhan Mantri Gramodaya Yojana 200022 Antyodaya Anna Yojana Dec 25, 2000

23 Pradhan Mantri Gram Sadak Yojana (PMGSY) Dec 25, 2000

24 Sampoorna Gramin Rozgar Yojana (SGRY) Sept 25, 2001

25 Jai Prakash Narayan Rozgar Guarantee Yojana 2002-03

26 Bharat Nirman Yojana 2005-06

27 Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) 2006

Various Poverty Alleviation and Employment Generation Programmes since Independence

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S.N. Organization Year of Establishment Headquarters

1 IMF (International Monetary Fund) Dec, 1945 Washington DC

2 IBRD (In ternational Bank for Reconstruction and Development) or World Bank Dec, 1945 Washington DC

3 WTO (World Trade Organization) 1995 Geneva

4 ADB (Asian Development Bank) 1966 Manila

5 ASEAN (Association of South East Asian Nations) 1967 Jakarta

6 APEC (Asian Pacific Economic Cooperation) 1989 –

7 NAFTA (North American Free Trade Agreement) 1992 –

8 EU (European Union) 1991 Brussels

9 OPEC (Organization of Petroleum Exporting Countries) 1960 Vienna

10 SAARC (South Asian Association for Regional Cooperation 1985 Kathmandu

11 G-15 1989 Geneva

12 OECD (Organization for Economic Cooperation and Development) 1961 Paris

13 UNO (United Nation Organization) Oct 24, 1945 New York

Important International Organizations

BANKING IN INDIA

The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks. The scheduled banks are those

which are defined under the 2nd Schedule of the Reserve Bank of

India Act, 1934. The scheduled banks are further classified into:

Nationalised banks; State Bank of India and its associates;

Regional Rural Banks (RRBs); foreign banks; and other Indian

private sector banks. The term commercial banks refer to both

scheduled and non-scheduled commercial banks which are

regulated under the Banking Regulation Act, 1949.

Generally banking in India was fairly mature in terms of supply,

product range and reach-even though reach in rural India and to

the poor still remains a challenge. The government has developed

initiatives to address this through the State Bank of India

expanding its branch network and through the National Bank for

Agriculture and Rural Development with things like microfinance.

MONETARY POLICY

Monetary policy is the macroeconomic policy laid down by the

central bank. It involves management of money supply and

interest rate and is the demand side economic policy used by the

government of a country to achieve macroeconomic objectives

like inflation, consumption, growth and liquidity.

In India, monetary policy of the Reserve Bank of India is aimed at

managing the quantity of money in order to meet the requirements

of different sectors of the economy and to increase the pace of

economic growth.

The RBI implements the monetary policy through open marketoperations, bank rate policy, reserve system, credit control policy,

moral persuasion and through many other instruments. Using

any of these instruments will lead to changes in the interest rate,

or the money supply in the economy. Monetary policy can be

expansionary and contractionary in nature. Increasing money

supply and reducing interest rates indicate an expansionary policy.

The reverse of this is a contractionary monetary policy.

For instance, liquidity is important for an economy to spur growth.

To maintain liquidity, the RBI is dependent on the monetary policy.

By purchasing bonds through open market operations, the RBI

introduces money in the system and reduces the interest rate.

UNEMPLOYMENT

Unemployment is a major developmental issue in Indian economy

is unemployment. When the labour possesses necessary ability

and health to perform a job, but does not get job opportunities

that state is called as unemployment. Number of unemployed is

equal to labour force minus workforce. The labour force refers to

the number of persons who are employed plus the number who

are willing to be employed. The work force includes those who

are actually employed in economic activity. If we deduct work

force from labour force we get the number of unemployment. The

unemployment rate means the number of persons unemployed

per 1000 persons in the labour force.TYPES OF UNEMPLOYMENT

Following are the important types of unemployment.

1. Voluntary unemployment: Voluntary unemployment

happens when people are not ready to work at the prevailing

wage rate even if work is available. It is a type of

unemployment by choice.

2. Involuntary Unemployment: It is a situation when people

are ready to work at the prevailing wage rate but could not

find job.

3. Natural Unemployment: This is postulated by the Post

Keynesians. According to them in every economy there

exists a particular percentage of unemployment.

4. Structural unemployment: This type of unemployment isnot a temporary phenomenon. This type of unemployment

occurs due structural changes in the economy. It results

due the result of backwardness and low rate of economic

development.

5. Disguised Unemployment: When more people are engaged

in a job than actually required, then it is called disguised

unemployment.

6. Under Employment: This exists when people are not fully

employment ie; when people are partially employed.

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7. Open Unemployment: Open unemployment is a situation

where a large labour force does not get work opportunities

that may yield regular income to them. It is just opposite to

disguised unemployment. It exists when people are ready

to work but are not working due to non availability of work.

8. Seasonal unemployment: Generally this type of

unemployment is associated with agriculture. This type of

unemployment occurs when the workers are engaged in a

season products.

9. Cyclical Unemployment: It is generally witnessed in developed

nations. This type of unemployment is due to business

fluctuation and is known as cyclical unemployment.

10. Technological Unemployment: This type of unemployment

occur when there is introduction of a new technology which

causes displacement of workers.

11. Frictional Unemployment:It is a temporary unemployment which

exists when people moved from one occupation to another.

POVERTY IN INDIA

Poverty in India is a historical reality. From late 19th century

through early 20th century, under British colonial rule, poverty in

India intensified, peaking in 1920s. Famines and diseases killed

millions each time. After India gained its independence in 1947,

mass deaths from famines were prevented, but poverty increased,

peaking post-independence in 1960s. Rapid economic growth

since 1991, has led to sharp reductions in extreme poverty in

India. However, those above poverty line live a fragile economic

life. Lack of basic essentials of life such as safe drinking water,

sanitation, housing, health infrastructure as well as malnutrition

impact the lives of hundreds of millions.

The World Bank reviewed and proposed revisions in May 2014,

to its poverty calculation methodology and purchasing power

parity basis for measuring poverty worldwide, including India.

According to this revised methodology, the world had 872.3 million

people below the new poverty line, of which 179.6 million peoplelived in India. In other words, India with 17.5% of total world's

population, had 20.6% share of world's poorest in 2011.

INFLATION

Inflation is the percentage change in the value of the Wholesale

Price Index (WPI) on a year-on year basis. It effectively measures

the change in the prices of a basket of goods and services in a

year. In India, inflation is calculated by taking the WPI as base.

Formula for calculating Inflation

=

(WPI in monthof corrent year-WPIin

samemonthof previousyear)×100

WPI insamemonth of previous year Inflation occurs due to an imbalance between demand and supply

of money, changes in production and distribution cost or increase

in taxes on products. When economy experiences inflation, i.e.,

when the price level of goods and services rises, the value of

currency reduces. This means now each unit of currency buys

fewer goods and services.

It has its worst impact on consumers. High prices of day-to-day

goods make it difficult for consumers to afford even the basic

commodities in life. This leaves them with no choice but to ask

for higher incomes. Hence the government tries to keep inflation

under control.

Contrary to its negative effects, a moderate level of inflation

characterises a good economy. An inflation rate of 2 or 3% is

beneficial for an economy as it encourages people to buy more and

borrow more, because during times of lower inflation, the level of

interest rate also remains low. Hence the government as well as the

central bank always strive to achieve a limited level of inflation.

BUDGETThe Union Budget referred to as the Annual Financial Statement

in Article 112 of the Constitution of India, is the annual budget of

the Republic of India, presented each year on the last working

day of February by the Finance Minister of India in Parliament.

The budget, which is presented by means of the Financial Bill

and the Appropriation bill has to be passed by the House before

it can come into effect on April 1, the start of India's financial year.

An Interim Budget is not the same as a 'Vote on Account'. While

a 'Vote on Account' deals only with the expenditure side of the

government's budget, an Interim Budget is a complete set of

accounts, including both expenditure and receipts.

An Interim Budget gives the complete financial statement, very

similar to a full Budget. While the law does not debar the Uniongovernment from introducing tax changes, normally during an

election year, successive governments have avoided making any

major changes in income tax laws during an Interim Budget.

POPULATION

The population of India is estimated at 1,267,401,849 as of July 1

2014. India's population is equivalent to 17.5% of the total world

population. India ranks number 2 in the list of countries by

population. The population density in India is 386 people per

Km2. 32% of the population is urban (410,404,773 people in 2014).

The median age in India is 26.6 years.

India is the second most populous country in the world, with

over 1.27 billion people (2014), more than a sixth of the world's population. Already containing 17.5% of the world's population

India is projected to be the world's most populous country by 2025,

surpassing China, its population reaching 1.6 billion by 2050. Its

population growth rate is 1.2%, ranking 94th in the world in 2013

The Indian population had reached the billion mark by 1998.

India has more than 50% of its population below the age of 25

and more than 65% below the age of 35. It is expected that, in

2020, the average age of an Indian will be 29 years, compared to

37 for China and 48 for Japan; and, by 2030, India's dependency

ratio should be just over 0.4.

Fertility Rate: (Total Fertility Rate, or TFR), it is expressed as

children per woman. It is calculated as the average number of children

an average woman will have during her reproductive period (15 to 49years old) based on the current fertility rates of every age group in

the country, and assuming she is not subject to mortality.

Density (P/Km²): (Population Density) Population per square

Kilometer (Km²).

Urban Pop %: Urban population as a percentage of total population.

Urban Population: Population living in areas classified as urban

according to the criteria used by each country.

Country's Share of World Pop: Total population in the country as a

percentage of total World Population as of July 1 of the year indicated.

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1. The central banking functions in India are performed by

the:

1. Central Bank of India

II. Reserve Bank of IndiaIII. State Bank of India

IV. Punjab National Bank

(a) I, II (b) II

(c) I (d) II, III

2. Development expenditure of the Central government does

not include:

(a) defence expenditure

(b) expenditure on economic services

(c) expenditure on social and community services

(d) grant to states

3. ICICI is the name of a:

(a) chemical industry (b) bureau(c) corporation (d) financial institution

4. On July 12, 1982, the ARDC was merged into:

(a) RBI

(b) NABARD

(c) EXIM Bank

(d) None of the above

5. In which of the following types of economy are the factors

of production owned individually?

(a) Capitalist

(b) Socialist

(c) Mixed

(d) Both (a) and (b)6. Poverty in less developed countries is largely due to:

(a) voluntary idleness

(b) income inequality

(c) lack of cultural activities

(d) lack of intelligence of the people

7. The most appropriate measure of a country’s economic

growth is its:

(a) Gross Domestic Product

(b) Net Domestic Product

(c) Net National Product

(d) Per Capita Real Income

8. Which of the following committees examined and suggested financial sector reforms?

(a) Abid Hussain Committee

(b) Bhagwati Committee

(c) Chelliah Committee

(d) Narasimham Committee

9. Which of the following contributes the maximum earnings

in Indian Railways?

(a) Passenger Earning (b) Goods Traffic Earning

(c) Sundry Earning (d) Other Coach Earning

10. SEBI is a

(a) constitutional body (b) advisory body

(c) staturory body (d) non-statutory body

11. Who has presented the Union Budget of India maximum

number of times?

(a) Choudhary Charan Singh

(b) Pranab Mukherjee

(c) VP Singh

(d) Morarji Desai

12. Who prints and supplies the currency notes in India?

(a) Security Press, Noida (b) Security Press, Mumbai

(c) RBI, Delhi (d) Security Press, Nasik

13. Indian Economy is...............economy.

(a) mixed (b) socialist

(c) free (d) Gandhian

14. The ‘Father of Economics’ is:

(a) Max Muller (b) Karl Marx(c) Adam Smith (d) Paul

15. National Sample Survey (NSS) was established in

(a) 1950 (b) 1951

(c) 1952 (d) 1943

16. Agriculture Income Tax is assigned to the State Government

by:

(a) the Finance Commission

(b) the National Development Council

(c) the Inter-State Council

(d) the Constitution of India

17. National Income is the:

(a) Net national product at market price(b) Net national product at factor cost

(c) Net domestic product at market price

(d) Net domestic product at factor cost

18. Who among the following was the first Chairman of the

Planning Commission?

(a) Dr Rajendra Prasad

(b) Pt Jawaharlal Nehru

(c) Sardar Vallabhbhai Patel

(d) JB Kriplani

19. Planning Commission was established in the year:

(a) 1950 (b) 1947

(c) 1975 (d) 1960

20. During which Plan the growth rate of agricultural production

was negative?

(a) Third Plan (b) Second Plan

(c) First Plan (d) None of these

21. The Planning Commission of India is:

(a) a constitutional body

(b) a statutory body

(c) a non-statutory body

(d) an independent and autonomous body

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22. Which one of the following statements most appropriately

describes the nature of the Green Revolution?

(a) Intensive cultivation of crops

(b) Seed-fertilizer-water technology

(c) Intensive agriculture district programme

(d) High-yielding varieties programme

23. Who gave the call for ‘Evergreen Revolution’ in India?

(a) MS Swaminathan (b) APJ Abdul Kalam

(c) Dr Manmohan Singh (d) MS Ahluwalia

24. Abid Hussain Committee is related to reforms in industries.

(a) private sector (b) large

(c) public sector (d) small

25. Name the First Indian private company to sign an accord

with Government of Myanmar for oil exploration in second

offshore blocks in that country:

(a) Reliance Energy (b) GAIL

(c) ONGC (d) Essar Oil

26. In which area is the public sector most dominant in India?

(a) Organized term lending financial institutions

(b) Transport

(c) Commercial banking

(d) Steel production27. Reserve Bank of India was nationalized in the year:

(a) 1935 (b) 1945

(c) 1949 (d) 1969

28. In India, inflation measured by the:

(a) Wholesale Price Index number

(b) Consumers Price Index for urban non-manual workers

(c) Consumers Price Index for agricultural workers

(d) National Income Deflation

29. Paper currency first started in India in:

(a) 1861 (b) 1542

(c) 1601 (d) 1880

30. Devaluation of currency leads to:

(a) fall in domestic prices

(b) increase in domestic prices

(c) no impact on domestic prices

(d) erratic fluctuations in domestic prices

31. The New Symbol of Indian Rupee is a blend of:

(a) Devanagiri Ra

(b) Roman R

(c) Devanagiri Ra and Roman

(d) None of these

32. National Rural Development Institute is situated at:

(a) Hyderabad (b) New Delhi

(c) Shimla (d) Patna

33. RBI was nationalised on:(a) 1945 (b) 1947

(c) 1949 (d) 1959

34. Foreign currency which has a tendency of quick migration

is called:

(a) Hot currency (b) Soft currency

(c) Gold currency (d) Scarce currency

35. Who introduced cooperative society in India?

(a) Lord Curzon (b) Lord Wavell

(c) Lord Rippon (d) Lord Cornwallis

36. The country without income tax is:

(a) Nepal (b) Kuwait

(c) Burma (d) Singapore

37. The former name of Reserve Bank of India was:

(a) National Bank of India (b) State Bank of India

(c) Imperial Bank of India (d) Central Bank of India

38. The currency Deutsche Mark belongs to:

(a) Italy (b) Russia

(c) Germany (d) Polland

39. MRTP Act was implemented in:

(a) 1967 (b) 1968

(c) 1969 (d) 1970

40. Corporate Tax is imposed by:

(a) State Government (b) Central Government

(c) Local Government (d) Both (a) and (b)

41. Which state has the highest Per Capita Income?

(a) Maharashtra (b) Delhi

(c) Punjab (d) Haryana

42. Regional Rural Banks were established in:

(a) 1897 (b) 1975

(c) 1965 (d) 1975

43. The currency notes are printed in:(a) Bombay (b) Nasik

(c) New Delhi (d) Nagpur

44. The former name of State Bank of India was:

(a) Central Bank of India (b) United Bank of India

(c) Imperial Bank of India (d) People’s Bank of India

45. Finance Commission is constituted every:

(a) two years (b) three years

(c) five years (d) six years

46. Who among the following first made economic planning

for India?

(a) M. N. Roy (b) Dadabhai Naoroji

(c) M. Vishveshwarya (d) Jawaharla Nehru

47. ‘Planned Economy of India’ was written by:

(a) M. Vishveshwarya (b) Dadabhai Naoroji

(c) Shriman Narayan (d) Jawaharla Nehru

48. ‘Sarvodaya Plan’ was prepared by:

(a) Jaiprakash Narayan (b) Mahatma Gandhi

(c) Binoba Bhave (d) Jawaharlal Nehru

49. Planning commission of India was established in:

(a) 1948 (b) 1950

(c) 1952 (d) 1951

50. National Development Council (NDC) was constituted in:

(a) 1948 (b) 1950

(c) 1952 (d) 1947

51. Planning in India was started in:

(a) 1951 (b) 1950

(c) 1952 (d) None of these

52. ‘Gadgil Formula’ is concerned with:

(a) 4th plan (b) 6th plan

(c) 1st plan (d) 3rd plan

53. ‘Mukherjee Committee’ was constituted during:

(a) 5th plan (b) 4th plan

(c) 6th plan (d) 8th plan

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54. Who made the first attempt to estimate the National Income

of India?

(a) Dadabhai Naoroji (b) RC Dutt

(c) V K R V Rao (d) PC Mahalanobis

55. Which of the following bank is a commercial bank?

(a) SBI

(b) Regional Rural Banks (RRBs)

(c) Cooperative Bank

(d) All of the above56. The Imperial bank of India was established in:

(a) 1945 (b) 1931

(c) 1921 (d) 1936

57. Mumbai Stock Exchange was set up in:

(a) 1875 (b) 1948

(c) 1952 (d) 1891

58. UTI is now controlled by:

(a) IDBI (b) Finance Ministry

(c) RBI (d) SBI

59. State Bank of India (SBI) came into existence in:

(a) 1948 (b) 1955(c) 1935 (d) 1949

60. NABARD was established in:

(a) 1982 (b) 1964

(c) 1980 (d) 1990

61. IDBI was established in:

(a) 1964 (b) 1972

(c) 1982 (d) 1955

62. RBI was nationalized in:

(a) 1949 (b) 1935

(c) 1969 (d) 1955

63. The largest bank of India is:(a) RBI (b) SBI

(c) Central Bank (d) Bank of India

64. The headquarter of RBI is in:

(a) Mumbai (b) Delhi

(c) Kolkata (d) Chennai

65. SEBI (Securities and Exchange Board of India) was

constituted in:

(a) 1986 (b) 1982

(c) 1988 (d) 1992

66. The majority of workers in India are:

(a) casual workers

(b) self-employed

(c) regular salaried workers

(d) None of these

67. Which of the following institutions does not provide loans

directly to the farmers?

(a) NABARD

(b) State Bank of India

(c) Regional Rural Bank

(d) Primary Agricultural Credit Society

68. The apex institution in the area of rural finance is:

(a) RBI (b) SBI

(c) NABARD (d) All of these

69. Who was the Chairman of the first Finance Commission?

(a) K Santhanam (b) A K Chandra

(c) P V Rajamannar (d) KC Niyogi

70. Who is the Chairman of the 13th Finance Commission?

(a) Vijay Kelkar (b) K C Pant

(c) C Rangarajan (d) Montek Singh Ahluwalia71. National Rural Employment Guarantee Scheme (NREGS)

came into force in:

(a) 2004 (b) 2006

(c) 2002 (d) 2005

72. Community Development Programme was launched in India

is:

(a) 1948 (b) 1952

(c) 1950 (d) 1951

73. Green Revolution in India was launched in:

(a) 1971-72 (b) 1960-61

(c) 1966-67 (d) 1980-81

74. Which of the following is/are included in the primary sector?(a) Agriculture (b) Mining

(c) Forestry (d) All of these

75. Which of the following is related to secondary sector?

(a) Manufacturing (b) Transport

(c) Trade (d) All of these

76. Service sector (tertiary sector) includes:

(a) trade (b) transport

(c) health and education (d) All of these

77. VAT has been introduced on the recommendation of:

(a) Kelkar Committee (b) Rangarajan Committee

(c) L K Jha Committee (d) None of these

78. In India, VAT was implemented on:

(a) 1 April, 2004 (b) 1 April, 2005

(c) 1 April, 2006 (d) 1 March, 2005

79. Which state published the Human Development Report for

the first time in India?

(a) Kerala (b) MP

(c) UP (d) Rajasthan

80. Disguised unemployment in India is prevalent in:

(a) service sector (b) manufacturing sector

(c) agriculture sector (d) None of these

81. Which state has the highest proportion of poor population?

(a) Orissa (b) Jharkhand

(c) Bihar (d) Chhattisgarh

82. Which state has the lowest per capita income?

(a) Orissa (b) Bihar

(c) MP (d) Rajasthan

83. Which sector contributes maximum to be India’s GDP?

(a) Primary sector (b) Secondary sector

(c) Tertiary sector (d) All sectors equally

84. Which of the following issues currency notes in India?

(a) Finance Ministry (b) Finance Secretary

(c) State Bank of India (d) Reserve Bank of India

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85. Economic Survey of India is published by:

(a) Finance Ministry (b) RBI

(c) Planning Commission (d) Ministry of Industry:

86. Which is the oldest Stock Exchange of India?

(a) BSE (b) NSE

(c) DSE (d) OTCEI

87. The slogan of ‘Garibi Hatao’ (Remove Poverty) was

launched in:

(a) 1st Plan (b) 4th Plan

(c) 5th Plan (d) 6th Plan

1 (b) 11 (d) 21 (c) 31 (c) 41 (c) 51 (a) 61 (a) 71 (b) 81 (a)

2 (a) 12 (c) 22 (b) 32 (a) 42 (d) 52 (a) 62 (a) 72 (b) 82 (b)

3 (d) 13 (c) 23 (a) 33 (c) 43 (d) 53 (d) 63 (a) 73 (c) 83 (a)

4 (b) 14 (c) 24 (c) 34 (a) 44 (c) 54 (a) 64 (a) 74 (d) 84 (d)

5 (a) 15 (c) 25 (d) 35 (a) 45 (c) 55 (a) 65 (c) 75 (a) 85 (a)

6 (b) 16 (a) 26 (c) 36 (b) 46 (c) 56 (c) 66 (b) 76 (d) 86 (a)

7 (d) 17 (d) 27 (c) 37 (d) 47 (a) 57 (a) 67 (a) 77 (c) 87 (b)

8 (d) 18 (b) 28 (a) 38 (c) 48 (a) 58 (a) 68 (c) 78 (b) 88 (b)

9 (b) 19 (a) 29 (a) 39 (d) 49 (b) 59 (b) 69 (d) 79 (b) 89 (a)

10 (c) 20 (a) 30 (b) 40 (b) 50 (c) 60 (a) 70 (a) 80 (c) 90 (a)

ANSW ER KEY

88. SEBI was given statutory status in:

(a) 1988 (b) 1992

(c) 1998 (d) 1993

89. UTI (Unit Trust of India) was established in:

(a) 1963 (b) 1966

(c) 1974 (d) 1982

90. First Export Processing Zone (EPZ) of the country in private

sector was established at:

(a) Surat (b) Kandla

(c) Noida (d) Vishakhapatnam

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