1
CHAPTER
ECONOMY
INTRODUCTION
The Economy of India is the ninth largest in the world by nominal
GDP and the third largest by purchasing power parity (PPP). The
independence-era Indian economy before and a little after 1947
was 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 inefficiencies
and widespread corruption. However, later on India adopted free
market principles and liberalised its economy to international trade.
Following these strong economic reforms, the country's economic
growth progressed at a rapid pace with very high rates of growth
and large increases in the incomes of people.
India recorded the highest growth rates in the mid-2000s, and is
one of the fastest-growing economies in the world. The growth
was led primarily due to a huge increase in the size of the middle
class consumer, a large labour force and considerable foreign
investments. India is the fourteenth largest exporter and eleventh
largest importer in the world.
Recently India has become one of the most attractive destinations
for investment owing to favourable government policies and
reforms. The approval of Foreign Direct Investment (FDI) in
several sectors have allowed investments to pour into the
economy. 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 International
Monetary Fund (IMF).
Sectors projected to do well in the coming years include
automotive, technology, life sciences and consumer products.
Engineering and research and development (ER&D) export
revenue 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 government
has 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.
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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 goods
on 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 become
one of the fastest-growing developing economies since 1990. It
is projected that in 2035, India will be the third largest economy of
the 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.
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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 th e 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 comes
to 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 starting
their 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.
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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 were
free 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 autonomy
There 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.

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 private
sector. 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.
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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. Financial
market 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 markets
financial 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. The
GDP is similar to GNP with procedural difference. In case of GNP
the incomes earned by the nationals in foreign countries are added
and incomes earned locally by the foreigners are deducted from
the 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 nationals
are deducted from the total value of domestically produced goods
and services.
ECONOMIC PLANNING IN INDIA
Economic planning in India was started in 1950 is necessary for
economic development and economic growth. Economic Planning
is a term used to describe the long term plans of government to
co-ordinate and develop the economy. Economic Planning is to
make decision with respect to the use of resources.
Need For Economic Planning: Social and Economic problem
created 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. About
one-third of its national income is derived from agriculture and its
allied sectors employing about two-third of the work force.
Given below are the organisations and concepts associated with
our economy:
The Department of Statistics in the Ministry of Planning and
Programme Implementation is the apex body in the official statistic
system 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.
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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 Affairs
The 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 external
economic management.
Public Finance: The power to raise and disburse public funds
has been divided under the constitution between union and State
Government. 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 and
disbursements. These are not subject to the vote of Parliament.
To meet unforeseen needs not envisaged in the Annual
Appropriation Act, a Contingency Fund has been established.
These three are in each state also.
Sources of Revenue: The main sources of the Union tax revenue
are Custom duties, Union excise duties, Corporate and Income
taxes, non-tax revenues comprise interest receipts, including
interest paid by the railways, telecommunications dividends and
profits.
The main heads of revenue in the states are taxes and duties
levied 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 inside
the 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

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 institution 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 they
have 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 will
compromise 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 NITI
Aayog will then provide a framework 'national agenda' for the
Prime Minister and the Chief Ministers to provide impetus to
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(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 that
may 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. To
offer 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 and
entrepreneurial 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 living
in 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 in
inequalities 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 Narayan
in 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 ‘Poverty
and 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 to Agriculture 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 basic
and 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.
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• 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 in
1974-75 to utilise water in major and medium irrigation projects
in 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 elections
and could implement Rolling Plan for 2 years for 1978-80.
Prof. DT Lakdawala was the Dy. Chairman, Planning
Commission.
• The idea “Rolling Plan” was taken from Japan.
• “Rolling Plan” concept coined by Gunnar Myrdal.
• “Hindu rate of Growth” crossed from 5th plan. This concept
was 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 in
the 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.
 7
10th Plan: 2002-07 Other Members of the Commission are:
• Growth rate target 87%, achieved 7.8% (i) Ms. Sushma Nath [Former Union Finance Secretary],
• Highest in the entire planning era : 5 crore employment, largest (ii) Dr. M.Govinda Rao [Director, National Institute for Public
allocation to energy. Finance and Policy, New Delhi].
(iii) Dr. Sudipto Mundle, Former Acting Chairman, National
11th Plan : 2007-12 Statistical Commission.
• Theme : “Faster and more Inclusive Growth” (iv) Prof Abhijit Sen (Member, Planning Commission) is the part-
• Total proposed outlay : ` 36,44,718 Crores (doubled) time Member of the Fourteenth Finance.
• Union Government ` 21,56,571 Crores (59.2%). (v) Commission. Shri Shri Ajay Narayan Jha is the Secretary,
• States ` 14,88,147 Crores (40.8%). Fourteenth Finance Commission.
• Approach paper to 11th Plan approved by the Planning Qualifications of the Members
Commission on 18-10-2006. The Chairman of the Finance Commission is selected among
• 52nd National Development Council approved the Draft Plan people who have had the experience of public affairs. The other
on 09-12-2006. four members are selected from people who:
• 54th National Development Council approved in its meeting 1. Are, or have been, or are qualified, as judges of High Court, or
on 19-12-2007 2. Have knowledge of Government finances or accounts, or
• 55th National Development council meet held on 24-07-2010. 3. Have had experience in administration and financial expertise;
or
• Central Gross Budgetary Support. ` 14,21,711 Crores.
4. Have special knowledge of economics
• This is centre’s support to plan.
Procedure and Powers of the Commission: The Commission
• Midterm Review of the 11th plan is done by Planning
has the power determine their own procedure and:
Commission on 23-03-2010, and the 11th plan growth target
1. Has all powers of the civil court as per the Court of Civil
is reduced from 9% to 8.1%. (It projects the growth rate for Procedure, 1908.
20-09-10, 20-10-11, 20-11-12 as 7.2%, 8.5% and 9% 2. Can summon and enforce the attendance of any witness or
respectively. Also to increase the outlay on infrastructure ask any person to deliver information or produce a document,
sector from the present $ 500 billion in 11th Plan to $ 1 Trillion which it deems relevant.
in 12th Plan). 3. Can ask for the production of any public record or document
12th Plan : 2012-17 from any court or office.
• This plan’s focus is on instilling “inclusive growth”. 4. Shall be deemed to be a civil court for purposes of Sections
• The plan is concentrated to encourages the development of 480 and 482 of the Code of Criminal Procedure, 1898.
India’s agriculture, education, health and social welfare Tenure of the 14th Finance Commission: The Finance
Commission is required to give its report by 31st October, 2014.
through government spending.
Its recommendations will cover the five year period commencing
• It is also expected to create employment through developing from 1st April, 2015.
India’s manufacturing sector and move the nation higher up
the value chain. S ome Important Committees
• Our PM Manmohan Singh, however, warned that Naars imhan Committee I-II Banking Sector Reforms
maintaining fiscal discipline is important as well. S.P. Gupta Committee Unemployment
FINANCE COMMISSION OF INDIA Onkar Gos wami Committee Industrial Sickness
Abid Hus sian Committee Small Scale Indus tries
A finance commission is set up every five years by the President
under Article 280 of the Constitution. Finance Commission of Shankar Lal Guru Committee Agricultural M arketing
India came into existence in 1951. M alhotra Committee Ins urance
It was formed to define the financial relations between the Rakes h M ohan Committee Infrastructure
centre and the state. These recommendations cover a period of Khan Committee Universal Banking
five years. Bhandari Committee Res tructuring of Rural Banks
The commission also lays down rules by which the centre should Chalayia Committee Tax Reforms
provide grants-in-aid to states out of the Consolidated Fund of N.K. Singh Committee Foreign Direct Inves tment
India. It is also required to suggest measures to augment the Janki Ram Committee Share Scam
resources of states and ways to supplement the resources of Rangrajan Committee Balance o f Payments
panchayats and municipalities.
Y V Reddy Committee Adminis tered Interes t Rate
Composition of the Fourteenth Finance Commission M S A hluwalia (Task Force) Employment Opportunities
The Fourteenth Finance Commission has been set up under the
M eera Seth Committee Handloom (Taxtile)
Chairmanship of Dr. Y.V.Reddy [Former Governor Reserve Bank
Abhijeet Sen Committee Grain Policy
of India].
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8
Important Financial Institutions of India
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 Industries Development Bank of India (SIDBI) 1990
Export-Import Bank of India (EXIM Bank) January 1, 1982
National Housing 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

Various Poverty Alleviation and Employment Generation Programmes since Independence

S.N. Programme Year of Begining
1 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 Assurance 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 2000
22 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

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 9

Important International Organizations

S.N. Organization Year of Establishment Headquarters
1 IMF (International Monetary Fund) Dec, 1945 Washington DC
2 IBRD (International 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

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 market
operations, 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.
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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 is
not 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.
10
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 temporaryunemployment 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 people
lived 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 month of corrent year-WPIin
same month of previous year)
= ×100
WPI in same month 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
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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.
BUDGET
The 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 Union
government 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 49
years 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.
 11

1. The central banking functions in India are performed by 10. SEBI is a

the: (a) constitutional body (b) advisory body
1. Central Bank of India (c) staturory body (d) non-statutory body
II. Reserve Bank of India 11. Who has presented the Union Budget of India maximum
III. State Bank of India number of times?
IV. Punjab National Bank (a) Choudhary Charan Singh
(a) I, II (b) II (b) Pranab Mukherjee
(c) I (d) II, III (c) VP Singh
(d) Morarji Desai
2. Development expenditure of the Central government does
12. Who prints and supplies the currency notes in India?
not include:
(a) Security Press, Noida (b) Security Press, Mumbai
(a) defence expenditure
(c) RBI, Delhi (d) Security Press, Nasik
(b) expenditure on economic services
13. Indian Economy is...............economy.
(c) expenditure on social and community services
(a) mixed (b) socialist
(d) grant to states
(c) free (d) Gandhian
3. ICICI is the name of a: 14. The ‘Father of Economics’ is:
(a) chemical industry (b) bureau (a) Max Muller (b) Karl Marx
(c) corporation (d) financial institution (c) Adam Smith (d) Paul
4. On July 12, 1982, the ARDC was merged into: 15. National Sample Survey (NSS) was established in
(a) RBI (a) 1950 (b) 1951
(b) NABARD (c) 1952 (d) 1943
(c) EXIM Bank 16. Agriculture Income Tax is assigned to the State Government
(d) None of the above by:
5. In which of the following types of economy are the factors (a) the Finance Commission
of production owned individually? (b) the National Development Council
(a) Capitalist (c) the Inter-State Council
(b) Socialist (d) the Constitution of India
(c) Mixed 17. National Income is the:
(d) Both (a) and (b) (a) Net national product at market price
6. Poverty in less developed countries is largely due to: (b) Net national product at factor cost
(a) voluntary idleness (c) Net domestic product at market price
(b) income inequality (d) Net domestic product at factor cost
(c) lack of cultural activities 18. Who among the following was the first Chairman of the
(d) lack of intelligence of the people Planning Commission?
7. The most appropriate measure of a country’s economic (a) Dr Rajendra Prasad
growth is its: (b) Pt Jawaharlal Nehru
(a) Gross Domestic Product (c) Sardar Vallabhbhai Patel
(b) Net Domestic Product (d) JB Kriplani
(c) Net National Product 19. Planning Commission was established in the year:
(d) Per Capita Real Income (a) 1950 (b) 1947
8. Which of the following committees examined and suggested (c) 1975 (d) 1960
financial sector reforms? 20. During which Plan the growth rate of agricultural production
(a) Abid Hussain Committee was negative?
(b) Bhagwati Committee (a) Third Plan (b) Second Plan
(c) Chelliah Committee (c) First Plan (d) None of these
(d) Narasimham Committee 21. The Planning Commission of India is:
9. Which of the following contributes the maximum earnings (a) a constitutional body
in Indian Railways? (b) a statutory body
(a) Passenger Earning (b) Goods Traffic Earning (c) a non-statutory body
(c) Sundry Earning (d) Other Coach Earning (d) an independent and autonomous body

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12
22. Which one of the following statements most appropriately 36. The country without income tax is:
describes the nature of the Green Revolution? (a) Nepal (b) Kuwait
(a) Intensive cultivation of crops (c) Burma (d) Singapore
(b) Seed-fertilizer-water technology 37. The former name of Reserve Bank of India was:
(c) Intensive agriculture district programme (a) National Bank of India (b) State Bank of India
(d) High-yielding varieties programme (c) Imperial Bank of India (d) Central Bank of India
23. Who gave the call for ‘Evergreen Revolution’ in India? 38. The currency Deutsche Mark belongs to:
(a) MS Swaminathan (b) APJ Abdul Kalam (a) Italy (b) Russia
(c) Dr Manmohan Singh (d) MS Ahluwalia (c) Germany (d) Polland
24. Abid Hussain Committee is related to reforms in industries. 39. MRTP Act was implemented in:
(a) private sector (b) large (a) 1967 (b) 1968
(c) public sector (d) small (c) 1969 (d) 1970
25. Name the First Indian private company to sign an accord 40. Corporate Tax is imposed by:
with Government of Myanmar for oil exploration in second (a) State Government (b) Central Government
offshore blocks in that country: (c) Local Government (d) Both (a) and (b)
(a) Reliance Energy (b) GAIL 41. Which state has the highest Per Capita Income?
(c) ONGC (d) Essar Oil (a) Maharashtra (b) Delhi
26. In which area is the public sector most dominant in India? (c) Punjab (d) Haryana
(a) Organized term lending financial institutions 42. Regional Rural Banks were established in:
(b) Transport (a) 1897 (b) 1975
(c) Commercial banking (c) 1965 (d) 1975
(d) Steel production 43. The currency notes are printed in:
27. Reserve Bank of India was nationalized in the year: (a) Bombay (b) Nasik
(a) 1935 (b) 1945 (c) New Delhi (d) Nagpur
(c) 1949 (d) 1969 44. The former name of State Bank of India was:
28. In India, inflation measured by the: (a) Central Bank of India (b) United Bank of India
(a) Wholesale Price Index number (c) Imperial Bank of India (d) People’s Bank of India
(b) Consumers Price Index for urban non-manual workers 45. Finance Commission is constituted every:
(c) Consumers Price Index for agricultural workers (a) two years (b) three years
(d) National Income Deflation (c) five years (d) six years
29. Paper currency first started in India in: 46. Who among the following first made economic planning
(a) 1861 (b) 1542 for India?
(c) 1601 (d) 1880 (a) M. N. Roy (b) Dadabhai Naoroji
30. Devaluation of currency leads to: (c) M. Vishveshwarya (d) Jawaharla Nehru
(a) fall in domestic prices 47. ‘Planned Economy of India’ was written by:
(b) increase in domestic prices (a) M. Vishveshwarya (b) Dadabhai Naoroji
(c) no impact on domestic prices (c) Shriman Narayan (d) Jawaharla Nehru
(d) erratic fluctuations in domestic prices 48. ‘Sarvodaya Plan’ was prepared by:
31. The New Symbol of Indian Rupee is a blend of: (a) Jaiprakash Narayan (b) Mahatma Gandhi
(a) Devanagiri Ra (c) Binoba Bhave (d) Jawaharlal Nehru
(b) Roman R
49. Planning commission of India was established in:
(c) Devanagiri Ra and Roman
(a) 1948 (b) 1950
(d) None of these
(c) 1952 (d) 1951
32. National Rural Development Institute is situated at:
50. National Development Council (NDC) was constituted in:
(a) Hyderabad (b) New Delhi
(a) 1948 (b) 1950
(c) Shimla (d) Patna
33. RBI was nationalised on: (c) 1952 (d) 1947
(a) 1945 (b) 1947 51. Planning in India was started in:
(c) 1949 (d) 1959 (a) 1951 (b) 1950
34. Foreign currency which has a tendency of quick migration (c) 1952 (d) None of these
is called: 52. ‘Gadgil Formula’ is concerned with:
(a) Hot currency (b) Soft currency (a) 4th plan (b) 6th plan
(c) Gold currency (d) Scarce currency (c) 1st plan (d) 3rd plan
35. Who introduced cooperative society in India? 53. ‘Mukherjee Committee’ was constituted during:
(a) Lord Curzon (b) Lord Wavell (a) 5th plan (b) 4th plan
(c) Lord Rippon (d) Lord Cornwallis (c) 6th plan (d) 8th plan
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 13
54. Who made the first attempt to estimate the National Income 68. The apex institution in the area of rural finance is:
of India? (a) RBI (b) SBI
(a) Dadabhai Naoroji (b) RC Dutt (c) NABARD (d) All of these
(c) V K R V Rao (d) PC Mahalanobis 69. Who was the Chairman of the first Finance Commission?
55. Which of the following bank is a commercial bank? (a) K Santhanam (b) A K Chandra
(a) SBI (c) P V Rajamannar (d) KC Niyogi
(b) Regional Rural Banks (RRBs) 70. Who is the Chairman of the 13th Finance Commission?
(c) Cooperative Bank (a) Vijay Kelkar (b) K C Pant
(d) All of the above (c) C Rangarajan (d) Montek Singh Ahluwalia
56. The Imperial bank of India was established in: 71. National Rural Employment Guarantee Scheme (NREGS)
(a) 1945 (b) 1931 came into force in:
(a) 2004 (b) 2006
(c) 1921 (d) 1936
(c) 2002 (d) 2005
57. Mumbai Stock Exchange was set up in:
72. Community Development Programme was launched in India
(a) 1875 (b) 1948
is:
(c) 1952 (d) 1891 (a) 1948 (b) 1952
58. UTI is now controlled by: (c) 1950 (d) 1951
(a) IDBI (b) Finance Ministry 73. Green Revolution in India was launched in:
(c) RBI (d) SBI (a) 1971-72 (b) 1960-61
59. State Bank of India (SBI) came into existence in: (c) 1966-67 (d) 1980-81
(a) 1948 (b) 1955 74. Which of the following is/are included in the primary sector?
(c) 1935 (d) 1949 (a) Agriculture (b) Mining
(c) Forestry (d) All of these
60. NABARD was established in:
75. Which of the following is related to secondary sector?
(a) 1982 (b) 1964
(a) Manufacturing (b) Transport
(c) 1980 (d) 1990
(c) Trade (d) All of these
61. IDBI was established in: 76. Service sector (tertiary sector) includes:
(a) 1964 (b) 1972 (a) trade (b) transport
(c) 1982 (d) 1955 (c) health and education (d) All of these
62. RBI was nationalized in: 77. VAT has been introduced on the recommendation of:
(a) 1949 (b) 1935 (a) Kelkar Committee (b) Rangarajan Committee
(c) 1969 (d) 1955 (c) L K Jha Committee (d) None of these
63. The largest bank of India is: 78. In India, VAT was implemented on:
(a) 1 April, 2004 (b) 1 April, 2005
(a) RBI (b) SBI
(c) 1 April, 2006 (d) 1 March, 2005
(c) Central Bank (d) Bank of India
79. Which state published the Human Development Report for
64. The headquarter of RBI is in:
the first time in India?
(a) Mumbai (b) Delhi (a) Kerala (b) MP
(c) Kolkata (d) Chennai (c) UP (d) Rajasthan
65. SEBI (Securities and Exchange Board of India) was 80. Disguised unemployment in India is prevalent in:
constituted in: (a) service sector (b) manufacturing sector
(a) 1986 (b) 1982 (c) agriculture sector (d) None of these
(c) 1988 (d) 1992 81. Which state has the highest proportion of poor population?
66. The majority of workers in India are: (a) Orissa (b) Jharkhand
(a) casual workers (c) Bihar (d) Chhattisgarh
(b) self-employed 82. Which state has the lowest per capita income?
(c) regular salaried workers (a) Orissa (b) Bihar
(d) None of these (c) MP (d) Rajasthan
67. Which of the following institutions does not provide loans 83. Which sector contributes maximum to be India’s GDP?
directly to the farmers? (a) Primary sector (b) Secondary sector
(a) NABARD (c) Tertiary sector (d) All sectors equally
(b) State Bank of India 84. Which of the following issues currency notes in India?
(c) Regional Rural Bank (a) Finance Ministry (b) Finance Secretary
(d) Primary Agricultural Credit Society (c) State Bank of India (d) Reserve Bank of India
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85. Economic Survey of India is published by: 88. SEBI was given statutory status in:
(a) Finance Ministry (b) RBI (a) 1988 (b) 1992
(c) Planning Commission (d) Ministry of Industry: (c) 1998 (d) 1993
86. Which is the oldest Stock Exchange of India? 89. UTI (Unit Trust of India) was established in:
(a) BSE (b) NSE (a) 1963 (b) 1966
(c) DSE (d) OTCEI (c) 1974 (d) 1982
87. The slogan of ‘Garibi Hatao’ (Remove Poverty) was 90. First Export Processing Zone (EPZ) of the country in private
launched in: sector was established at:
(a) 1st Plan (b) 4th Plan (a) Surat (b) Kandla
(c) 5th Plan (d) 6th Plan (c) Noida (d) Vishakhapatnam

ANSW ER KEY
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)
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 15

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