Question 1

Indian cooperative credit structure: Central Co-operative Banks are directly connected with which tier?  Identify the institutions with which district-level Central Co-operative Banks primarily interface.

Accepted Answer

Three-tier structure State Co-operative Bank (state/apex) → Central Co-operative Bank (district) → Primary Agricultural Credit Societies (village). Direct touch CCBs deal directly with PACS for lending, refinance, and supervision. Final Answer Primary Agricultural Credit Societies (PACS) at the village level

Question 2

Centre–state resource transfer in India: What are the main channels?  Identify the important mechanisms used to transfer financial resources from the Union government to the States.

Accepted Answer

Given mechanisms Transfers include: (i) tax devolution as recommended by Finance Commissions; (ii) grants-in-aid (statutory & discretionary); (iii) loans/plan assistance and transfers via centrally sponsored schemes. Final Answer Tax devolution, grants-in-aid, and loans/plan assistance

Question 3

Banking history: In which year was the first wholly Indian-owned bank established?  Identify the year of establishment of the Oudh Commercial Bank, considered the first wholly Indian bank.

Accepted Answer

Background Allahabad Bank (1865) was European-owned. The first wholly Indian-owned joint-stock bank is widely recorded as the Oudh Commercial Bank founded in 1881 at Faizabad. Final Answer 1881

Question 4

National income accounting: Compute value added in a simple production process.  Output of utensils = ₹1000; intermediate inputs: copper ₹500 and other materials ₹100; wages = ₹100; depreciation = ₹0.  Find the value added at this production stage.

Accepted Answer

Given data Value of output = ₹1000 Intermediate consumption = ₹500 + ₹100 = ₹600 Wages (factor payment) = ₹100 Depreciation = ₹0 Computation (production approach) Value Added = Output − Intermediate Consumption = 1000 − 600 = ₹400. Check (income approach) Value Added = Wages (₹100) + Operating surplus/profit (₹300) = ₹400. Final Answer ₹400

Question 5

Agricultural insurance reform: When was the National Agricultural Insurance Scheme (NAIS) introduced, replacing the Comprehensive Crop Insurance Scheme?  State the launch year at which NAIS began implementation.

Accepted Answer

Context NAIS replaced the earlier Comprehensive Crop Insurance Scheme and was rolled out starting Rabi 1999–2000. The introduction year recorded is 1999. Final Answer 1999

Question 6

Indian coinage reform: In which year did India adopt the decimal system of coinage?  State the year when paise (100 = ₹1) replaced annas/pies.

Accepted Answer

Fact India decimalised its coinage effective 1 April 1957, shifting to 100 paise = ₹1 from the anna–pie system. Final Answer 1957

Question 7

Public finance: What does “fiscal deficit” in India's Union Budget measure?  Choose the correct definition in terms of government expenditure and receipts.

Accepted Answer

Definition Fiscal deficit = Total Expenditure − (Revenue Receipts + Non-Debt Capital Receipts). It shows the government's net borrowing requirement in a budget year. Final Answer Total expenditure minus (revenue receipts + non-debt capital receipts), i.e., the net borrowing requirement

Question 8

Role of State Financial Corporations (SFCs): Which sector do SFCs mainly support?  Identify the enterprises that primarily receive SFC assistance in Indian states.

Accepted Answer

Mandate Under the SFCs Act, 1951, State Financial Corporations provide medium/long-term finance largely to small and medium industrial concerns within their states. Final Answer Small and medium-scale industrial units (SMEs/MSMEs)

Question 9

Macroeconomic aggregates: What items are included in “national expenditure”?  Identify the components summed to obtain total (national) expenditure for the economy.

Accepted Answer

Identity In expenditure terms, aggregate demand/expenditure is C + I + G + (X − M). In a closed-economy statement, it comprises consumer expenditure, investment, and government expenditure. Final Answer Consumer expenditure, investment (capital formation), and government expenditure (plus net exports in an open economy)

Question 10

Financial statements: Which item does not appear on a company’s balance sheet? Select the option that belongs to the income statement rather than the balance sheet.

Accepted Answer

Concept The balance sheet shows assets, liabilities, and equity at a point in time. Sales revenue is an income statement (profit & loss) item over a period. Final Answer Sales revenue (turnover)

Question 11

Accounting concept: What is “depreciation”?  Choose the most accurate description in the context of fixed assets and financial reporting.

Accepted Answer

Definition Depreciation is the systematic allocation of the depreciable amount of a tangible asset over its useful life, reflecting wear, tear, and obsolescence. Final Answer A gradual reduction in the value of a fixed asset due to wear and tear, usage, or obsolescence

Question 12

Public expenditure classification: Which item is not part of the Central Government’s development expenditure? Pick the expenditure generally classified as non-development (non-plan) historically.

Accepted Answer

Classification idea Development (economic/social) expenditure includes outlays on agriculture, industry, health, education, etc. Defense is traditionally classified as non-development expenditure. Final Answer Defense expenditure

Question 13

Keynesian transmission mechanism: What is the sequence from money supply change to price level change?  Choose the pathway emphasized in Keynesian models before full-employment constraints bind.

Accepted Answer

Mechanism Higher money supply lowers interest rates (liquidity preference), stimulates investment, raises aggregate demand and income/output. As capacity tightens, prices rise. Final Answer M ↑ → Interest rate ↓ → Investment ↑ → Income/output ↑ → Prices ↑

Question 14

Banking history: Identify the first Indian-managed limited-liability bank founded in 1881.  Choose the correct bank established and managed by Indians with limited liability.

Accepted Answer

Fact Oudh Commercial Bank (1881, Faizabad) is noted as the first Indian-managed joint-stock bank with limited liability. PNB came later (1894). Final Answer Oudh Commercial Bank

Question 15

Exchange rate policy: In which year was the rupee’s link to the pound sterling as an intervention currency broken?  State the year India moved away from single-currency intervention to a basket-based approach.

Accepted Answer

Background India discontinued using the pound sterling as the sole intervention currency and shifted to a basket-based approach in 1975, reflecting global currency realignments. Final Answer 1975

Question 16

Budget terminology: What does “budget deficit” mean in public finance (traditional Indian usage)?  Identify the definition in terms of government receipts and expenditure.

Accepted Answer

Clarification Historically in India, “budgetary deficit” was the excess of total expenditure over total receipts including borrowings—thus often reflecting the monetised gap. It has been supplanted by broader measures like fiscal deficit (Expenditure − [Revenue Receipts + Non-Debt Capital Receipts]). Final Answer Excess of total expenditure over total receipts including borrowings (a narrow, older concept)

Question 17

Finance and securities market terminology: What does the term 'gilt-edged market' mean? In Indian and global finance, ‘‘gilt-edged’’ denotes the safest, high-grade, government-backed debt securities segment of the capital market. Choose the correct …

Accepted Answer

Given concept Gilt-edged originally referred to British government bonds (“gilts”). Over time, it has come to mean the market in which the safest, sovereign or highest-rated debt instruments are traded. In India, this usage aligns with government securities (G-secs) and other AAA-grade bonds, i.e., the low-risk fixed-income segment. Why the other options are incorrect Precious metals (option B) concern bullion, not securities.Blue-chip equities (option C) are stocks, not gilt-edged debt.Forex (option D) is currency trading, not bond markets.Commodity futures (option E) are derivatives on goods, not sovereign/AAA bonds. Key takeaway A gilt-edged market is the segment dealing in government and other top-quality fixed-income securities characterized by very low default risk and high credit standing. Final Answer Market for government and other top-rated fixed-income securities

Question 18

History of currency convertibility: Where did the original concept arise?  Consider early monetary regimes that defined convertibility into specie (e.g., gold). Choose the correct option.

Accepted Answer

Concept Currency convertibility in its original sense meant convertibility of notes/deposits into specie (gold/silver). The classical gold standard (19th–early 20th century), pioneered by Britain, codified this idea in modern monetary practice. Final Answer Britain under the classical gold standard

Question 19

Public finance: How can non-tax revenue be increased?  Focus on improving performance of government-owned commercial entities and services. Choose the correct option.

Accepted Answer

Concept Non-tax revenue includes dividends/surplus from PSUs, user charges, fees, interest, spectrum/asset receipts, etc. Reasoning Strengthening PSU performance directly lifts dividends/surpluses and other non-tax receipts without altering tax rates. Final Answer By improving the efficiency and profitability of public sector enterprises

Question 20

Institutional evolution: ARDC later became a part of which body?  ARDC = Agricultural Refinance and Development Corporation, merged during rural credit reforms. Choose the correct option.

Accepted Answer

Fact In 1982, ARDC was merged into NABARD, which took over agricultural refinance/development functions. Final Answer NABARD (National Bank for Agriculture and Rural Development)

Indian Economy Questions