Preparing for competitive exams like UPSC, SSC, Banking, and Railway requires a solid understanding of the Indian economy. This blog brings you a comprehensive set of Indian economy multiple choice questions with answers for UPSC SSC Banking Railway to help you revise key concepts and assess your preparation. The Indian economy is a vital part of the General Studies and General Awareness sections in almost every government exam.
📚 Why Focus on Indian Economy?
The Indian economy multiple choice questions with answers for UPSC SSC Banking Railway cover vital topics like national income, inflation, monetary and fiscal policy, budget, taxation, economic reforms, poverty, and employment. These MCQs are based on the latest syllabus and frequently asked patterns in various exams.
✅ Key Highlights:
50+ well-researched Indian economy multiple choice questions with answers for UPSC SSC Banking Railway
Each question includes detailed explanations
Perfect for last-minute revision and self-assessment
Covers static and current economic concepts
🧠 Bonus Tips:
Revise these Indian economy multiple choice questions with answers for UPSC SSC Banking Railway twice a week.
Combine with current economic affairs from PIB, The Hindu, and Budget/Economic Survey.
Use flashcards and quizzes for better retention.
📌 50+ Indian Economy Multiple Choice Questions with Answers for UPSC SSC Banking Railway
1. What type of economy does India follow?
A) Capitalist
B) Socialist
✅ C) Mixed economy
D) Liberal economy
Explanation: India follows a mixed economy where both private and public sectors coexist.
2. What is the primary sector of the Indian economy?
✅ A) Agriculture
B) Industry
C) Services
D) Banking
Explanation: The primary sector includes agriculture, forestry, and fishing.
3. Which sector contributes the most to India’s GDP?
A) Agriculture
B) Manufacturing
✅ C) Services
D) Construction
Explanation: The services sector accounts for over 50% of India’s GDP.
4. Who prepares the Union Budget in India?
A) President
✅ B) Ministry of Finance
C) RBI
D) Prime Minister
Explanation: The Union Budget is presented by the Finance Minister.
5. What is fiscal deficit?
A) Difference between revenue and expenditure
B) Excess income over expenditure
✅ C) Excess expenditure over revenue
D) Loan from World Bank
Explanation: Fiscal deficit occurs when total expenditure exceeds total revenue.
6. When was the Reserve Bank of India established?
A) 1930
✅ B) 1935
C) 1947
D) 1950
Explanation: RBI was established on April 1, 1935.
7. What is the full form of GDP?
A) Gross Domestic Purchase
✅ B) Gross Domestic Product
C) Government Domestic Product
D) General Domestic Purchase
Explanation: GDP measures the total value of goods and services in a country.
8. Which institution is known as the Banker to the Government?
✅ A) RBI
B) SEBI
C) SBI
D) Finance Ministry
Explanation: RBI manages the banking needs of the central and state governments.
9. The term ‘Green Revolution’ is related to:
✅ A) Agriculture
B) Industry
C) IT
D) Banking
Explanation: It refers to the use of high-yielding variety seeds and improved agricultural techniques.
10. Which Five-Year Plan focused on industrialization?
A) First Plan
✅ B) Second Plan
C) Third Plan
D) Tenth Plan
Explanation: The Second Five-Year Plan (1956–1961) emphasized heavy industries.
11. Which sector contributes the most to India’s GDP?
• A) Agriculture
• B) Industry
✅ C) Services
• D) Mining
Explanation: The services sector contributes over 50% to India’s GDP, including IT, finance, education, and health services.
12. What is ‘Fiscal Deficit’?
• A) Excess of revenue over expenditure
✅ B) Excess of total expenditure over total receipts excluding borrowings
• C) Difference between imports and exports
• D) Revenue from foreign direct investment
Explanation: Fiscal deficit is a measure of the government’s borrowing requirement, excluding borrowing itself.
13. What is the full form of NITI Aayog?
✅ A) National Institution for Transforming India
• B) National Indian Trade Initiative
• C) New Industrial and Trade Innovation Authority
• D) None of the above
Explanation: NITI Aayog replaced the Planning Commission in 2015 as India’s policy think tank.
14. Which year saw the introduction of GST in India?
• A) 2015
• B) 2016
✅ C) 2017
• D) 2018
Explanation: The Goods and Services Tax (GST) was implemented from July 1, 2017.
15. What is the current base year for calculating India’s GDP?
• A) 2004–05
• B) 2010–11
✅ C) 2011–12
• D) 2013–14
Explanation: As of now, India uses 2011–12 as the base year for calculating GDP.
16. Which index is used to measure inflation in India at the retail level?
• A) WPI
✅ B) CPI
• C) IIP
• D) MSP
Explanation: The Consumer Price Index (CPI) measures retail inflation, reflecting changes in prices for goods and services.
17. The largest source of revenue for the central government is:
• A) Corporate Tax
• B) GST
✅ C) Income Tax
• D) Customs Duty
Explanation: Income tax (both corporate and personal) forms a major chunk of central government revenue.
18. Disinvestment refers to:
• A) Investing in startups
✅ B) Selling government stake in public sector enterprises
• C) Cutting subsidies
• D) Reducing interest rates
Explanation: Disinvestment is the process of selling shares of government-owned companies to private players or the public.
19. Which organization is responsible for collecting and publishing economic data in India?
• A) RBI
✅ B) Ministry of Statistics and Programme Implementation (MoSPI)
• C) SEBI
• D) NABARD
Explanation: MoSPI is the nodal agency responsible for statistical data and GDP calculations.
20. What does ‘Repo Rate’ mean in Indian economy?
✅ A) Rate at which RBI lends money to commercial banks
• B) Rate at which banks lend to RBI
• C) Rate of taxation on exports
• D) Rate charged on FDI
Explanation: Repo rate controls the flow of money and liquidity in the economy and is used as a monetary policy tool.
21. Which five-year plan focused on “Garibi Hatao”?
• A) First Five-Year Plan
✅ B) Fifth Five-Year Plan
• C) Ninth Five-Year Plan
• D) Tenth Five-Year Plan
Explanation: The Fifth Plan (1974–79) emphasized poverty removal and employment generation.
22. What is ‘Core Inflation’?
• A) Inflation including food and fuel
• B) Deflation
✅ C) Inflation excluding food and fuel prices
• D) Only industrial inflation
Explanation: Core inflation reflects the persistent price rise in other sectors and is useful for policy formulation.
23. What is the meaning of Balance of Payments (BoP)?
• A) Government’s fiscal balance
✅ B) Record of all economic transactions between India and the rest of the world
• C) Trade deficit only
• D) Remittances from NRIs
Explanation: BoP includes current and capital accounts, summarizing India’s financial position globally.
24. Who publishes the Economic Survey of India?
• A) RBI
• B) NITI Aayog
✅ C) Ministry of Finance
• D) SEBI
Explanation: The Economic Survey is released a day before the Union Budget and outlines the economic progress and challenges.
25. What does ‘FDI’ stand for in the context of the Indian economy?
• A) Financial Deposit Investment
✅ B) Foreign Direct Investment
• C) Fixed Domestic Investment
• D) Fiscal Deficit Index
Explanation: FDI involves investment from foreign entities into Indian businesses with ownership or management control.
26. Which scheme aims to provide minimum income support to farmers?
• A) MGNREGA
✅ B) PM-KISAN
• C) PMAY
• D) Make in India
Explanation: PM-KISAN provides ₹6,000 per year to eligible farmer families.
27. What is the purpose of the ‘Startup India’ initiative?
• A) Subsidies for agriculture
✅ B) Promote entrepreneurship and innovation
• C) Tax reduction for corporates
• D) Employment for government jobs
Explanation: The initiative aims to create an ecosystem that fosters entrepreneurship and job creation.
28. What is the current unemployment measurement methodology in India?
• A) Population Census
✅ B) Periodic Labour Force Survey (PLFS)
• C) NSSO 66th round
• D) IIP Index
Explanation: PLFS, conducted by NSO, gives quarterly and annual employment data.
29. Which ministry handles industrial policy and FDI in India?
• A) Ministry of Labour
✅ B) Ministry of Commerce and Industry
• C) Ministry of External Affairs
• D) Ministry of Agriculture
Explanation: The Department for Promotion of Industry and Internal Trade (DPIIT) under this ministry handles it.
30. Which bank is referred to as the ‘Banker’s Bank’?
• A) SBI
✅ B) Reserve Bank of India (RBI)
• C) NABARD
• D) ICICI
Explanation: RBI regulates and supervises all commercial banks in India, hence called the ‘Banker’s Bank’.
31. Which sector contributes the highest to India’s GDP?
• A) Agriculture
• ✅ B) Services
• C) Industry
• D) Mining
Explanation: Services contribute over 50% to India’s GDP, making it the top sector.
32. What is the full form of MSP in the Indian economy?
• A) Market Support Price
• ✅ B) Minimum Support Price
• C) Marginal Sales Price
• D) Maximum Selling Price
Explanation: MSP ensures farmers are protected against sharp price drops.
33. Which committee recommended the introduction of GST in India?
• A) Kelkar Committee
• B) Narasimham Committee
• ✅ C) Vijay Kelkar Task Force
• D) Rangarajan Committee
Explanation: GST was first suggested by the Kelkar Task Force to simplify taxation.
34. The concept of Economic Planning in India is borrowed from:
• A) USA
• B) UK
• ✅ C) USSR
• D) France
Explanation: India’s Five-Year Plans are inspired by the Soviet planning model.
35. Which institution releases the Index of Industrial Production (IIP)?
• A) RBI
• B) Finance Ministry
• C) SEBI
• ✅ D) National Statistical Office (NSO)
Explanation: NSO publishes IIP to measure industrial performance.
36. What is the current base year for GDP calculation at constant prices?
• A) 2004–05
• ✅ B) 2011–12
• C) 2015–16
• D) 2020–21
Explanation: The base year for GDP calculation is 2011–12.
37. What does ‘Fiscal Deficit’ mean?
• A) Total revenue – total capital
• B) Revenue receipt – expenditure
• ✅ C) Total expenditure – total revenue (excluding borrowings)
• D) Gross revenue – taxes
Explanation: It reflects how much the government borrows to meet expenses.
38. What is not included in Money Supply (M1)?
• A) Currency with public
• B) Demand deposits
• ✅ C) Time deposits
• D) Other deposits with RBI
📘 Explanation: Time deposits belong to M3, not M1.
39. Who regulates the stock exchanges in India?
• A) RBI
• B) Finance Ministry
• ✅ C) SEBI
• D) IRDA
Explanation: SEBI oversees all market-related activities and ensures transparency.
40. What is Repo Rate?
• A) Lending rate to customers
• ✅ B) Rate at which RBI lends to banks
• C) Bank’s FD rate
• D) Reverse repo equivalent
Explanation: It is a key tool for RBI’s monetary policy.
41. Which tax was abolished after the implementation of GST?
• A) Income Tax
• B) Wealth Tax
• ✅ C) Value Added Tax (VAT)
• D) Securities Transaction Tax
Explanation: GST subsumed VAT and other indirect taxes.
42. What is meant by ‘Disinvestment’?
• A) Buying assets
• ✅ B) Selling public sector shares
• C) Export increase
• D) Private takeover
Explanation: Disinvestment reduces government holding in PSUs.
43. What is Stagflation?
• A) Booming economy
• ✅ B) Inflation with unemployment and stagnant growth
• C) Recession recovery
• D) Budget surplus
Explanation: It’s a harmful mix of inflation and economic slowdown.
44. Which state topped the SDG Index 2023?
• A) Maharashtra
• ✅ B) Kerala
• C) Gujarat
• D) Tamil Nadu
Explanation: Kerala consistently performs well in health and education metrics.
45. What is the economic condition when too much money chases too few goods?
• ✅ A) Inflation
• B) Recession
• C) Deflation
• D) Depression
Explanation: High demand with limited supply leads to price rise = inflation.
46. Who releases the Wholesale Price Index (WPI)?
• A) RBI
• ✅ B) Office of the Economic Adviser
• C) NSO
• D) Ministry of Finance
Explanation: The Office under DPIIT, Ministry of Commerce, issues the WPI data.
47. Gender budgeting was introduced in which Indian Budget year?
• A) 2000–01
• ✅ B) 2005–06
• C) 2010–11
• D) 2014–15
Explanation: It began to ensure gender-sensitive public expenditure.
48. Which scheme enables zero-balance accounts for financial inclusion?
• A) Atal Pension Yojana
• ✅ B) Jan Dhan Yojana
• C) BharatNet
• D) Mudra Yojana
Explanation: Jan Dhan Yojana made banking accessible to millions.
49. What causes a Current Account Deficit (CAD)?
• A) Export > Import
• ✅ B) Import > Export
• C) Trade surplus
• D) Fiscal surplus
Explanation: When a country imports more than it exports, CAD occurs.
50. What is the chief goal of RBI’s Monetary Policy?
• A) GDP growth
• ✅ B) Inflation control and liquidity regulation
• C) Tax planning
• D) Boosting exports
Explanation: RBI aims to maintain price stability while ensuring economic growth.
51. What does CRAR stand for in banking regulation?
• A) Credit Ratio
• ✅ B) Capital to Risk-Weighted Assets Ratio
• C) Capital Reserves Assessment Rule
• D) Credit Rating Average Ratio
Explanation: CRAR shows the bank’s ability to withstand risk.
52. Which sector is often referred to as the ‘Sunrise Sector’?
• A) Manufacturing
• B) Agriculture
• ✅ C) IT Sector
• D) Education
Explanation: IT is a fast-growing, employment-rich industry.
53. Main objective of ‘Atmanirbhar Bharat’?
• A) Attract FDI
• B) Encourage exports
• ✅ C) Promote self-reliance
• D) Decrease subsidies
Explanation: It aims to reduce import dependence and boost domestic production.
54. GDP deflator is used to:
• A) Measure tax
• ✅ B) Adjust nominal GDP to real GDP
• C) Find export-import balance
• D) Calculate GNP
Explanation: It reflects price level changes in the overall economy.
55. Main function of NITI Aayog is:
• A) Implement schemes
• ✅ B) Policy think tank and strategy guide
• C) Control inflation
• D) Draft tax laws
Explanation: It provides policy inputs and promotes cooperative federalism.
📌 Conclusion
The Indian economy multiple choice questions with answers for UPSC SSC Banking Railway are an essential tool for aspirants aiming for success in competitive exams. These MCQs not only test your knowledge but also train you to think critically and stay updated with economic developments. With changing policies, global economic shifts, and evolving financial systems, practicing Indian economy multiple choice questions with answers for UPSC SSC Banking Railway ensures that you’re well-prepared and confident.
This topic covers everything—from GDP and fiscal deficit to government schemes, inflation, banking, and more—offering holistic preparation. Whether you’re focusing on macroeconomic indicators or sectoral contributions, solving Indian economy multiple choice questions with answers for UPSC SSC Banking Railway gives you an edge in the Prelims and Mains stages of your exams.
Keep revising and solving these curated sets of Indian economy multiple choice questions with answers for UPSC SSC Banking Railway, and you’ll be on the right track to cracking the GK and Current Affairs sections with ease.
1. Why are Indian economy multiple choice questions with answers for UPSC SSC Banking Railway important?
✅ These MCQs are important because they help students understand key economic concepts, analyze government schemes, and prepare for real-time exam patterns. Practicing Indian economy multiple choice questions with answers for UPSC SSC Banking Railway enhances accuracy and speed.
2. What topics are covered under Indian economy multiple choice questions with answers for UPSC SSC Banking Railway?
✅ Topics include GDP, inflation, budget, Five-Year Plans, RBI policies, NITI Aayog, agriculture, industry, banking reforms, and global economic impact. These Indian economy multiple choice questions with answers for UPSC SSC Banking Railway are designed to be comprehensive.
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5. Where can I find reliable Indian economy multiple choice questions with answers for UPSC SSC Banking Railway?
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✅ Ideally, solving 20–30 Indian economy multiple choice questions with answers for UPSC SSC Banking Railway daily, along with revision, will help you retain facts and concepts for a longer time and improve your exam performance.
