Economics · Banking Financial Awareness

Indian Economy and Policy

1,777 Questions

Indian economy and policy questions cover the structural dynamics and regulatory measures shaping the national market. Topics include foreign direct investment, taxation reforms, and government initiatives for growth. This section is highly relevant for competitive exams requiring economic awareness.

Foreign direct investmentGST impactEconomic reformsTrade policyGovernment economic initiatives

Indian Economy and Policy Questions

Multiple choice

As we have noticed many banks of Indian origin are opening offices/branches in foreign countries. Why is this trend emerging at a very fast pace ?

  1. These Banks wish to provide banking facilities to foreigners as banking facilities are not plenty in many foreign countries. India wants to take an advantage of the situation.
  2. These banks wish to help Indian firms to acquire funds at internationally competitive rates.
  3. These banks wish to promote trade and investment between India and other countries.

  1. Only 1

  2. Only 2

  3. Only 3

  4. All 1, 2 and 3

  5. Only 2 and 3
Reveal answer Fill a bubble to check yourself
E Correct answer
Multiple choice

Many economists, bankers and researchers in India often advocate that banks should equip themselves for new challenges. These challenges are in which of the following shapes/forms?

  1. As Indian economy is getting increasingly integrated with the rest of the world the demand of the Corporate banking is likely to change in terms of size, composition of services and also the quality.
  2. The growing foreign trade in India will have to be financed by the local banks.
  3. Foreigners are habitual of the comforts provided by the technology. India has to do a lot in this reference.

  1. Only 1 is correct

  2. Only 2 is correct

  3. Only 3 is correct

  4. All 1, 2 and 3 are correct

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Indian banks face challenges due to global economic integration, which requires higher standards of corporate banking, and the need to finance growing foreign trade. While technology is important, statement 3 is less of a direct 'challenge' to the banking sector's operational core compared to the first two.

Multiple choice

Lately, many highly skilled engineers from the IT industry in India have left their jobs in significant numbers to move to foreign shores. It is therefore quite likely that the competent IT professionals who remain in the industry in India are in high demand in their respective domains.

Which one of the following, if true, most seriously weakens the argument?

  1. Indian IT industry prefers to hire engineers from within the country than to hire them from abroad.

  2. Major changes in the organizational structures in Indian IT industry have led to the elimination of many positions previously held by the highly skilled engineers.

  3. Many Indian IT engineers emigrating to foreign shores need to acquire new IT skills after finding work.

  4. Indian IT industry plans to train many new workers to replace the skilled IT professionals who have emigrated.

  5. Because of the departure of skilled engineers from Indian IT industry, many positions in the industry are now vacant.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

To weaken the given argument we need to prove that the positions made vacant by emigration of skilled engineers are not required to be filled by the industry. This is what option (2) states. Hence (2)

Multiple choice

Directions: Read the following passage/information and answer the question that follows. Multinationals have a habit of dumping their international concepts on the market place while advertising their brands in India. Some international jokers do not even change their foreign models or dub the advertisement in Indian languages.

Which of the following undermines the argument above?

  1. Many multinationals learn the hard way when the products don't sell.

  2. The burgeoning number of multinationals in India has kept the advertising agency cash registers jingling.

  3. Multinationals and advertising agencies have been passing the buck to each other for lack of creativity.

  4. Some advertising agencies adapt the foreign advertisements to the Indian culture and ethos.

  5. The multinationals also after all operate through their regional contacts only.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

 Option 4 is an example that at least some multinationals are doing the opposite. Hence, the answer.

Multiple choice

Directions: For the following question, select the option that best replaces the parenthesis in the given paragraph.

Indian capital goods industry is passing through a period of deep crisis (.) With the drastic reduction of customs duties on capital goods, imported goods have flooded the Indian market. Indian industry is finding it very difficult to compete with the technologically superior plant and machinery from the developed countries. Naturally, in the times of globalization, every one has doubts about Indian competitiveness.

  1. Due to liberalization, import has become very easy.

  2. However, we see a very curious trend contrary to expectations.

  3. This industry may soon be wiped off the face of Indian manufacturing sector.

  4. Import of raw materials through the VABAL scheme was misused.

  5. We have to address this crisis sooner than later.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The clue is that imported goods have flooded the Indian market. This makes option (1) very suitable. 

Multiple choice

Which of the following is NOT TRUE according to the UNCTAD's World Investment Report 2004, released recently?

  1. India ranks 89th on the potential FDI Index.

  2. India tops the list in FDI in offshoring services.

  3. India has 60 export oriented FDI projects, second after US.

  4. All of the above are true.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The UNCTAD World Investment Report 2004 contained various statistics regarding India's FDI performance. Option D is marked as correct because the question asks for what is NOT true, and since all statements A, B, and C were considered accurate at the time of the report, the 'All of the above are true' option is the logical choice for a 'NOT TRUE' question format.

Multiple choice

Why did India export Gold to Bank of England U.K. in 1991?

  1. To meet foreign exchange crisis.

  2. India returned U.K. gold.

  3. For investments in British companies.

  4. India returned gold taken as loan from U.K.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

India export Gold to Bank of England U.K. in 1991 in order to meet foreign exchange crisis. By 1967, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had reduced to such a point that India could barely finance three weeks' worth of imports. India had to airlift its gold reserves to pledge it with International Monetary Fund (IMF) for a loan. 

Multiple choice

As a part of its commitment to the World Trade Organization (WTO) India has taken various steps to reform its financial sector. Which of the following is one major step in this direction?

  1. Huge budgetary provision for Bharat Nirman Yojana

  2. More and more foreign banks are allowed to open their branches in India

  3. Rebate in rate of personal income tax for Senior Citizen

  4. Introduction of Dividend Distribution Tax (DDT)

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

To align with WTO commitments and global financial standards, India progressively liberalized its banking sector, allowing more foreign banks to establish operations in India to increase competition and efficiency.