Indian Economic Development Practice Paper – 01
Q1. Read the Following Statements: Choose One of the correct Alternative.
Assertion (A): Modernization implies the adoption of new technology along with a change in the social and economic outlook.
Reason(R): Over the years, there has been a reduction in the gender wage parity and in the female labor force participation rate.
Choose the correct option:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true
ANS. Assertion (A) is true but Reason (R) is false.
CASE. [Q2 – Q4]Read the following case study and answer the given questions.
The performance of the Indian economy during the period of the first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of the first seven plans, our industries became far more diversified, with the stress being laid on the public investments in the industrial sector. The policy of import substitution led to the protection of the domestic industries against the foreign producers but we failed to promote a strong export surplus. Although the public sector expanded to a large extent it could not bring the desired level of improvement in the secondary sector.
Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation, and no modernization on the front of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology, and other similar reasons.
These PSUs even continued to function because it was difficult to close a government undertaking even if it is a drain on the country’s limited resources. On the agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the need for reforms of economic policy was widely felt in the context of changing global economic scenarios to achieve desired growth in the country.
Q2. Which of the following was not a reason for the public sector to play a major role in the initial phase of Indian economic planning?
(a) Private entrepreneurs lacked sufficient capital for investments
(b) Government aimed for social welfare
(c) The market was big enough to encourage private industrialists for investments
(d) The government wanted to protect the indigenous producers from foreign competition
ANS. The market was big enough to encourage private industrialists for investments
Q3. Inward looking trade policy aimed at
(a) Substituting imports with domestic production
(b) Substituting imports of consumer goods with capital goods
(c) Following an open economy model
(d) Restrictions on the movement of currency flows
ANS. Substituting imports with domestic production
Q4. The mechanization of Indian agriculture was one of the causes of the Green Revolution in India. The given statement is
(a) True
(b) False
(c) Partially True
(d) Partially False
ANS. TRUE
Q5. Assertion (A): New set of economic policies was introduced in 1991, which changed the the course of economic development of India.
Reason (R): Foreign exchange reserve crisis, external debt crisis, and rising prices of the essential good forced government-led India to adopt a new set of policies.
Choose the Right option:
(a) Both the statements are true and Reason (R) the correct explanation of assertion (A)
(b) Both the statements are true but reason (R) is not the correct explanation of assertion (A)
(c) Assertion (A) is true but reason (R) is false.
(d) Assertion (A) is false but reason (R) is true.
ANS. Both the statements are true and Reason (R) is the correct explanation of assertion (A)
Q6. Read the following statements – Assertion (A) and Reason (R):
Assertion (A) – Major policy initiatives (land reforms and Green Revolution) helped India to become self-sufficient in food grains production.
Reason(R) – The proportion of people depending on agriculture did not decline as expected after the Green Revolution.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
ANS. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Q7. Ms. Raman Preet has started a new business venture, she intends to spend a huge amount towards ‘on-the-job training’ of her workers before putting them to work. It exhibits the right step in the direction of Human Capital Formation.
Spot which of the following does not directly contribute to the process of human capital formation by Ms. Raman Preet:-
(a) adds skills and expertise
(b) improves efficiency
(c) ensure gender equity
(d) increases output productivity
ANS. Increases output productivity.
Q8. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – The government of India adopted the ‘Trickle Down Approach’ to alleviate poverty to
benefit the last man at the bottom of the pyramid.
Statement 2 – Empirical data over the years have shown that trickle-down theory did not yield desired results in India.
(a) Both the statements are true
(b) Both the statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 1 is false and Statement 2 is true
ANS. Both the statements are false.
Q9. Identify the correct formula to calculate Fiscal Deficit
(a) Total expenditure – Total Receipt (other than borrowings)
(b) Revenue Expenditure- Revenue Receipt
(c) Capital Expenditure- Capital Receipt
d) Revenue Expenditure + Capital expenditure – Revenue Receipt
ANS. Total expenditure – Total Receipt (other than borrowings)
Q10. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – 1991 was a landmark moment in India’s post-independence history as that changed the nature of the economy in fundamental ways.
Statement 2 –India’s economic establishment launched a multipronged reforms agenda to repair India’s macroeconomic balance sheet and ignite growth.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
ANS. Both the statements are false.
Q11. Read the following statements – Assertion (A) and Reason (R):
Assertion (A) – India’s pre-1990 economic strategy dismantles the vast network of controls and permits that dominated the economic system.
Reason (R) – The 1991 reforms unleashed the energies of Indian entrepreneurs, gave untold choices to consumers, and changed the face of the Indian economy.
From the given alternatives choose the correct one:
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.
ANS. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
Q12. In the light of the given text and common knowledge, identify the incorrect statement: –
(a) A severe balance of payments problem triggered an acute economic crisis in 1991.
(b) In 1991, the economic and political leadership launched a multipronged reforms agenda to repair the macroeconomic situation of the nation.
(c) In the post-1991 situation, the state was given the role of primary regulator of the economy.
(d) Post pandemic, individual sectors should be looked at closely. Sectors that need reforms should be identified and corrective action should be taken.
ANS. In 1991, the economic and political leadership launched a multipronged reforms agenda to repair the macroeconomic situation of the nation.
Q13. Read the following statements carefully and choose the correct alternatives given below:
Statement 1 – Timing and sequencing are critically important in the post-economic reform agenda.
Statement 2 – Post pandemic reforms in India require a paradigm shift.
Alternatives:
(a) Both the statements are true.
(b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false
ANS. Both the statements are false.
Q14. Read the following statements – Assertion (A) and Reason (R):
Assertion (A) – The 1991 reforms released the vitalities of Indian businesspersons.
Reason (R) – The reform agenda established a paradigm shift and defined the broad outlines of economic policymaking for years to come.
From the given alternatives choose the correct one:
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
c) Assertion (A) is true but Reason (R) is false.
d) Assertion (A) is false but Reason (R) is true.
ANS. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).