Trivia Quiz On Indian Economy And Economic Reforms In India

The correct answer is World Trade Organisation. WTO is an international organization that deals with the global rules of trade between nations. It aims to ensure that trade flows as smoothly, predictably, and freely as possible. The organization provides a forum for negotiating trade agreements, settling disputes, and monitoring the implementation of trade policies. It plays a crucial role in promoting economic growth, development, and job creation worldwide.

Globalisation refers to the process of integrating the domestic economy with the world economy. It involves the exchange of goods, services, capital, and information across borders, leading to increased interconnectedness and interdependence among countries. Through globalisation, countries open up their markets, remove trade barriers, and promote international trade and investment. This allows for the flow of goods, services, and capital across borders, leading to economic growth, technological advancements, and cultural exchange. Therefore, globalisation is the correct answer as it best describes the integration of the domestic economy with the world economy.

The correct answer is "Foreign Exchange Management Act." FEMA stands for Foreign Exchange Management Act. This act is a legislation passed by the Indian government to regulate foreign exchange transactions, currency exchange rates, and related matters. It aims to facilitate external trade and payments and promote orderly development and maintenance of foreign exchange market in India.

The correct answer is Foreign Exchange Regulation Act. FERA stands for Foreign Exchange Regulation Act, which was a law enacted by the Indian government in 1973 to regulate foreign exchange transactions and preserve the stability of the country's currency. This act aimed to control and restrict the use of foreign exchange and prevent its misuse. It imposed strict regulations on foreign exchange transactions, including restrictions on the possession and transfer of foreign currency. FERA was eventually replaced by the Foreign Exchange Management Act (FEMA) in 1999.

Privatisation refers to the transfer of assets or services functions from public to private ownership. This involves the sale or transfer of government-owned businesses, industries, or services to private individuals or companies. Privatisation is often implemented as a way to increase efficiency, improve service quality, and stimulate economic growth by allowing the private sector to take over the management and operation of previously government-controlled entities. This can also lead to increased competition and innovation in the market.

The given answer is correct because the RBI, which stands for Reserve Bank of India, is the central bank of India and its main objective is to maintain price stability and ensure the stability of the Indian financial system. It is responsible for regulating and supervising the banking sector in India, managing the country's foreign exchange reserves, and formulating and implementing monetary policy. While the RBI plays an important role in the Indian economy, it does not have a specific mandate to promote trade among South Asian countries. That responsibility falls under the purview of other organizations such as the South Asian Association for Regional Cooperation (SAARC).

The correct answer is "All of the above" because unsustainable levels of government deficits in the late '80s were caused by a combination of high levels of government expenditures, insufficient revenues, and poor returns on government investments. High levels of government expenditures indicate that the government was spending more money than it was bringing in, leading to deficits. Insufficient revenues suggest that the government was not generating enough income to cover its expenses. Poor returns on government investments imply that the government's investments were not generating enough profit or income to contribute to balancing the budget. Together, these factors contributed to the unsustainable levels of government deficits.

Fiscal policy refers to the government's decisions and actions regarding its revenue generation and spending. It involves policies related to taxation, government spending, borrowing, and debt management. This policy aims to influence the overall economy by controlling the level of aggregate demand, promoting economic growth, and stabilizing inflation. It is different from monetary policy, which focuses on controlling the money supply and interest rates. Therefore, the correct answer is "Policy relating to public revenue and public expenditure."

Liberalisation refers to the relaxation of previous government restrictions. It involves reducing regulations and barriers to trade and investment, allowing for more economic freedom and competition. Privatisation, globalisation, and disinvestment do not specifically refer to the relaxation of government restrictions, making them incorrect options.

The correct answer is (a) & (b) both. In order for privatization to be successful, it is necessary to have both liberalization and de-regulation of the economy, as well as sufficiently developed capital markets. Liberalization and de-regulation create a competitive environment that allows for private companies to thrive and operate efficiently. On the other hand, developed capital markets provide the necessary infrastructure for privatization to take place, such as stock exchanges for the trading of shares. Therefore, both (a) liberalization and de-regulation of the economy, and (b) sufficiently developed capital markets are pre-conditions for successful privatization.

The FRBMA, 2003 emphasizes on all of the above options. It aims to achieve revenue-led fiscal consolidation by focusing on increasing revenue generation and reducing fiscal deficit. It also aims for better expenditure outcomes by ensuring efficient and effective utilization of government funds. Additionally, it emphasizes the rationalization of the tax regime by simplifying and streamlining the tax structure to promote ease of compliance and reduce tax evasion.

The correct answer is (A)II (B)IV (C)I (D)III. The explanation is that the World Trade Organization (WTO) is a multilateral trade negotiating body, the Reserve Bank of India (RBI) is the central bank of India, the International Monetary Fund (IMF) provides loans to address short-term balance of payments problems, and the International Bank for Reconstruction and Development (IBRD) facilitates lending and borrowing for reconstruction and development.

The correct answer is "It abolished licensing for all projects except IS industries of strategic and security importance." The New Industrial Policy of 1991 aimed to liberalize and deregulate the Indian economy. As part of this policy, licensing requirements were abolished for most industries, except for those considered to be of strategic and security importance (IS industries). This move was intended to promote entrepreneurship, attract foreign investment, and foster competition in the Indian industrial sector. By eliminating unnecessary regulations, the government aimed to create a more business-friendly environment and stimulate economic growth.

In the post-reform period, the correct statement is that quantitative restrictions have been removed on most of the items except a few goods. This means that the government has relaxed restrictions on the import and export of goods, allowing for more free trade. However, there are still a few goods that are subject to quantitative restrictions, indicating that some level of control and regulation still exists in the external sector. This approach promotes economic liberalization while maintaining some level of protection for certain industries or goods.

The correct answer is "All of the above" because the statement mentions three different aspects of economic reforms - keeping fiscal deficits to targeted levels, fully implementing industrial deregulation, and fully opening the economy to trade. The answer suggests that all three aspects have failed to be achieved, indicating that none of them were successfully implemented as intended.

CENVAT stands for Central Value Added Tax. This tax is levied on the value added to goods or services at each stage of production and distribution. It is a form of indirect tax that is collected by the central government in India. The correct answer option states the correct expansion of CENVAT.

There are currently only 6 industries for which licensing is compulsory.

Disinvestment refers to the process of selling off equity shares of public sector units in the market. This is usually done to reduce the government's stake in these units and promote private ownership. Privatisation, on the other hand, involves transferring ownership and control of public sector units to private entities. Globalisation and liberalisation are broader concepts that encompass various economic reforms and policies aimed at opening up markets and promoting international trade.

FDI, or Foreign Direct Investment, refers to the investment made by a foreign entity in the business activities of another country. In this case, the question is asking which of the given options does not allow FDI. The correct answer is "Lottery business." This means that foreign entities are not permitted to invest in lottery businesses. However, FDI is allowed in banking operations, insurance, and air transport services.

The correct answer is that the public sector was given a dominant position in the newly Independent India. This means that after India gained independence, the government played a significant role in the country's economic activities, with state-owned enterprises and public institutions having a major presence and influence. This decision was made to promote economic development and social welfare through government control and intervention in key sectors of the economy.

The correct answer is that prior approval of the central government for establishing new undertakings and expanding existing undertakings is not required. This means that under the New Industrial Policy of 1991, businesses are no longer required to seek permission from the central government before starting new ventures or expanding existing ones. This policy change aims to promote and facilitate entrepreneurship and economic growth by reducing bureaucratic hurdles and allowing businesses to operate more freely.

Under the New Industrial Policy of 1991, the mandatory convertibility clause is no longer applicable. This means that term loans are no longer required to be converted into equity shares after a certain period of time. This change was made to provide more flexibility to businesses and to attract foreign investment. By removing this requirement, businesses have more freedom in managing their finances and can choose whether or not to convert their loans into equity shares.

The correct answer is "Under strategic sale method of disinvestment, the government sells a major share to a strategic buyer." This statement accurately describes the process of strategic sale in disinvestment. In this method, the government sells a significant portion of its shares in a public sector undertaking (PSU) to a strategic buyer, who is usually a private entity that can bring in expertise and resources to improve the PSU's performance. This strategy is often used to attract investment and promote efficiency in the PSU sector.

The given answer is incorrect because the Foreign Trade Policy, 2004-09 did not restrict the entry of FDI in India. Instead, it aimed to promote foreign direct investment and create a favorable environment for foreign investors. The policy focused on liberalizing trade and attracting FDI to boost economic growth and development.

During 1991, when economic reforms were enforced in India, several developments were noticed. The national debt was nearly 60% of the GNP, indicating a significant financial burden. Inflation crossed double digits, indicating a rise in prices and a decrease in purchasing power. However, the exception is that foreign reserves were not maintained at a very high level. This suggests that India did not have a large amount of foreign currency reserves during this period.

The correct answer is "Fiscal Responsibility and Budget Management Act." This act was passed by the Indian government in 2003 to ensure fiscal discipline and reduce the country's fiscal deficit. It aims to promote transparency and accountability in fiscal management, improve the overall financial health of the government, and strengthen the country's macroeconomic stability. The act sets targets for fiscal deficit reduction, debt management, revenue generation, and expenditure control, and requires the government to adhere to these targets. It also establishes mechanisms for monitoring and reporting on the government's fiscal performance.

The correct answer is that the public sector's portfolio will be reviewed with greater realism. The focus will be on strategic high tech and essential infrastructure industries. This means that under the New Industrial Policy of 1991, there will be a reassessment of the public sector's investments and priorities. The government will prioritize industries that are considered strategic, such as high tech industries, and essential infrastructure industries. This suggests a shift in focus towards sectors that are crucial for the country's economic growth and development.

At present only 3 industries are reserved for the public sector.

At present, 100 per cent FDI is allowed in the drugs and pharmaceuticals sector. This means that foreign companies can fully own and invest in Indian companies involved in the manufacturing and selling of drugs and pharmaceutical products. This policy allows for increased foreign investment and technology transfer in the sector, which can lead to growth and development in the Indian pharmaceutical industry.

During the pre-reform period, the banking sector operated in a highly regulated environment. This means that there were strict rules and regulations in place that governed the functioning of banks. These regulations aimed to ensure stability and protect the interests of the general public. Banks had to adhere to guidelines regarding interest rates, lending practices, and capital requirements, among other things. This regulatory framework was put in place to prevent risky behavior and maintain the overall health of the banking sector.

Privatisation may result in lopsided development of industries in the country. This means that when industries are privatised, there is a possibility that certain industries may thrive while others may suffer, leading to an uneven distribution of economic development. This could occur due to factors such as market competition, investment priorities, and the interests of private companies. Therefore, privatisation does not guarantee balanced growth and can potentially lead to an imbalanced industrial landscape in a country.

The correct answer is that the average tariff rates have been reduced. This means that the taxes imposed on imported goods have been lowered, making them more affordable and accessible to consumers. This reduction in tariff rates encourages foreign trade by making it more economically viable for businesses to import goods. It also promotes competition in the domestic market by allowing foreign goods to enter at lower costs. Overall, reducing average tariff rates is a positive outcome of foreign trade reforms as it stimulates economic growth and benefits consumers and businesses alike.

EPCG stands for Export Promotion Capital Goods. This program is designed to promote exports by allowing import of capital goods for pre-production, production, and post-production at zero customs duty. This helps in boosting the manufacturing sector and enhancing the competitiveness of Indian goods in the international market. The program provides various benefits and incentives to exporters, encouraging them to invest in new technology and machinery for improving their production capabilities.

In private banking, 74% FDI is allowed now.

Before financial reforms, the banking system was characterized by administered interest rates structure, quantitative restrictions on credit flow, and high revenue requirements. However, it did not keep very few lendable resources for the priority sector.

The Special Economic Zones (SEZ) Act came into effect in 2006. This act was implemented to promote exports, attract foreign investment, and boost economic growth in India. SEZs are designated areas where businesses enjoy special incentives and tax benefits, encouraging them to set up operations and contribute to the country's economy. By establishing SEZs, the government aimed to create employment opportunities, enhance infrastructure development, and increase foreign exchange earnings. The SEZ Act of 2006 played a crucial role in facilitating the growth of SEZs and promoting economic development in India.

IDA, or the International Development Association, is the soft lending arm of the World Bank. It provides low-interest or interest-free loans and grants to the world's poorest countries. IDA's main goal is to reduce poverty by supporting development projects and programs that promote economic growth, improve education and healthcare, and address other pressing development challenges. Unlike other branches of the World Bank, IDA focuses specifically on assisting countries with the greatest need and limited ability to access traditional commercial loans.

FDI (Foreign Direct Investment) refers to the investment made by a foreign entity in the business operations of another country. The question asks for an exception where FDI is not prohibited. The correct answer is "Banking operations." This means that foreign entities are allowed to invest in banking operations in the given context. However, it is important to note that FDI may be subject to certain regulations and restrictions in different countries.

The correct answer is "None of the above." This means that privatization has taken place in all of the mentioned cases, including CMC, BALCO, and VSNL.

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The correct answer is "None of the above" because none of the statements provided are correct with regard to the external sector in the pre-reform period. The foreign trade policy was not very liberal; it had significant restrictions and regulations on imports. Import of foodgrains was not strictly prohibited; there were certain quotas and controls in place. The balance of payments situation was not quite comfortable; India faced significant challenges in managing its external debt and trade deficits during this period. Therefore, none of the statements are correct.

In 2009, the disinvestment program started with the initial public offering (IPO) of NHPC. This means that NHPC was the first company to be included in the disinvestment program in 2009.

DFEC stands for Duty Free Export Credit. This term refers to a type of credit facility that is provided to exporters to promote and support their exports. Duty Free Export Credit allows exporters to access funds at favorable terms and conditions, enabling them to finance their export activities, cover production costs, and expand their business. This credit facility is typically offered by financial institutions or government agencies to encourage and incentivize exports, ultimately contributing to the growth of the economy.

The correct answer is "Federation of Indian Export Organisations." FIEO is an abbreviation for this organization which represents and promotes the interests of Indian exporters. It serves as a platform for exporters to address their concerns, network, and collaborate with government bodies and other stakeholders. The organization plays a crucial role in enhancing India's exports and contributing to the growth of the country's economy.

The given options state various changes in relation to banks in the post-reform period. However, the correct answer states that none of the options are correct. This implies that the bank rate has not been increased to 10 per cent, the CRR has not been increased to 20 per cent, and public sector banks have not been asked to raise their funds from their private resources only.