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BPSC 2023 — Indian Economy Questions with Answers

All 44 Indian Economy previous-year questions from BPSC 2023, each with the correct answer and a full explanation. Practise them as a free, timed mock test with instant scoring.

1. Q1.International Reports

   Answer the following: Describe the parameters and impacts of the Global Wage Report, 2022-23.

2. Q2.Trade Policy

   Answer the following: What are the basic provisions of the Foreign Trade Policy, 2023 regarding export promotion initiatives in India?

3. Q3.Development Theory

   Explain 'trickle-down' theory of economics, its major elements, benefits, limitations and criticisms in context to Indian planning.

4. Q4.Government Schemes

   Which of the following Union Ministries recently launched the Yuva 2.0 scheme in 2022?

   • a)Ministry of Health and Family Welfare
   • b)Ministry of Education
   • c)Ministry of AYUSH
   • d)More than one of the above
5. Q5.Infrastructure

   At which of the following places did the Prime Minister inaugurate the first Greenfield airport 'Donyi Polo Airport'?

   • a)Dholka
   • b)Itanagar
   • c)Dibrugarh
   • d)More than one of the above
6. Q6.Banking and Finance

   India's first floating financial literacy camp was recently organized by India Post Payments Bank at which of the following places?

   • a)Srinagar
   • b)Andaman Islands
   • c)Kerala
   • d)More than one of the above
7. Q7.Standards and Quality

   For the first time in India, the embassy of which country applied for a GI tag for 'Nihonshu'?

   • a)China
   • b)Japan
   • c)South Korea
   • d)More than one of the above
   • e)None of the above
8. Q8.Indices and Reports

   According to the economic survey of 2019-2020, which district has the lowest per capita income?

   • a)Sheohar
   • b)Araria
   • c)Sitamarhi
   • d)More than one of the above
   • e)None of the above
9. Q9.Indices and Reports

   According to the NITI Aayog SDG Report for the year 2020-2021, what was the score of Bihar state?

   • a)22 out of 100
   • b)35 out of 100
   • c)52 out of 100
   • d)More than one of the above
   • e)None of the above
10. Q10.Industry

    Which of the following statements about the sugar industry in India is correct?

    • a)It is a weight-losing industry.
    • b)Maharashtra has emerged as a leading sugar producer in the country.
    • c)Uttar Pradesh is the second largest producer of sugar.
    • d)More than one of the above
    • e)None of the above
11. Q11.Industry

    In which district is the industry with the highest tax contribution located?

    • a)Darbhanga
    • b)Purnia
    • c)Kishanganj
    • d)More than one of the above
    • e)None of the above
12. Q12.Industry

    What are the objectives of the SEZ Act, 2005? 1. Production of additional economic activities 2. Promotion of export of goods and services 3. Employment generation

    • a)1, 2 and 3
    • b)Only 2 and 3
    • c)Only 1 and 3
    • d)More than one of the above
    • e)None of the above
13. Q13.Agriculture

    What policy measure has been adopted by the Government of India to improve the agricultural marketing system?

    • a)Minimum Support Price (MSP)
    • b)Maintenance of buffer stock
    • c)Public Distribution System (PDS)
    • d)More than one of the above
    • e)None of the above
14. Q14.Government Schemes

    Which committee suggested enacting the Competition Act, 2002?

    • a)Rangarajan Committee
    • b)S. V. S. Raghavan Committee
    • c)Vijay Kelkar Committee
    • d)More than one of the above
    • e)None of the above
15. Q15.Agriculture

    Match List-I with List-II: List-I: a. Grey Revolution b. Pink Revolution c. Silver Revolution d. Red Revolution List-II: 1. Onion production 2. Tomato and meat production 3. Egg production 4. Fertilizer (Fertilizer)

    • a)a-4, b-1, c-3, d-2
    • b)a-3, b-1, c-4, d-2
    • c)a-1, b-4, c-2, d-3
    • d)More than one of the above
    • e)None of the above
16. Q16.Government Schemes

    Which of the following Five Year Plans focused on human resource development?

    • a)First
    • b)Third
    • c)Fifth
    • d)More than one of the above
    • e)None of the above
17. Q17.External Sector

    Which of the following states in India received the highest Foreign Direct Investment (FDI) as equity during April to September 2022?

    • a)Karnataka
    • b)Tripura
    • c)Gujarat
    • d)More than one of the above
    • e)None of the above
18. Q18.Monetary Policy

    In which budget did the Finance Minister announce the Liberalized Exchange Rate Management System (LERMS)?

    • a)Union Budget, 1991-1992
    • b)Union Budget, 1992-1993
    • c)Union Budget, 1993-1994
    • d)More than one of the above
    • e)None of the above
19. Q19.Government Schemes

    Which of the following were the objectives of the Five Year Plans? 1. Development 2. Modernization 3. Self-reliance 4. Literature

    • a)Only 1, 3 and 4
    • b)Only 2, 3 and 4
    • c)Only 1, 2 and 4
    • d)More than one of the above
    • e)None of the above
20. Q20.Indices and Reports

    Which organization conducts the survey to determine the poverty line?

    • a)N.S.S.O.
    • b)NITI Aayog
    • c)R.B.I.
    • d)More than one of the above
    • e)None of the above
21. Q21.International Trade

    India's trade balance (goods and services) for December 2022 (provisional) is:

    • a)(-) 10.50 billion US dollars
    • b)(+) 11.98 billion US dollars
    • c)(-) 11.98 billion US dollars
    • d)More than one of the above
    • e)None of the above
22. Q22.Currencies

    Which among the following currencies is the costliest?

    • a)Euro
    • b)Pound Sterling
    • c)US Dollar
    • d)None of the above

    Explanation: Among the given options, Pound Sterling (GBP) generally has a higher exchange rate value compared to the Euro (EUR) and the US Dollar (USD), making it the costliest.

23. Q23.External Sector

    The Foreign Exchange Reserves (FER) of RBI include which of the following? 1. Foreign Currency Assets (FCA) 2. Gold 3. Special Drawing Rights (SDR) 4. Reserve Tranche Position. Select the correct answer using the codes given below.

    • a)Only 1 and 2
    • b)Only 2, 3 and 4
    • c)Only 1, 2 and 3
    • d)All of the above

    Explanation: The Foreign Exchange Reserves (FER) of India, managed by the RBI, consist of four main components: Foreign Currency Assets (FCA), Gold, Special Drawing Rights (SDRs), and Reserve Tranche Position (RTP) with the IMF. Therefore, all the given statements are correct.

24. Q24.International Trade

    Consider the following statements about 'Rules of Origin': 1. Rules of Origin are the criteria needed to determine the national source of a product. 2. Rules of Origin help the custom agencies to know what regulations and fees apply to a given product. 3. These are used for the purpose of trade statistics. 4. Their importance is derived from the fact that duties and restrictions in several cases depend upon the sources of imports. Which of the above statements are correct?

    • a)Only 1 and 2
    • b)Only 3 and 4
    • c)Only 1, 3 and 4
    • d)All of the above

    Explanation: All the statements regarding 'Rules of Origin' are correct. They are crucial for determining the national source of a product, applying appropriate customs regulations and fees, compiling trade statistics, and implementing duties and restrictions based on the origin of imports.

25. Q25.Demography

    Consider the following statements about infant mortality rate: 1. It is the probability of dying between birth and exactly 1 year of age, expressed per 10000 live births. 2. The infant mortality rate in the year 1950 was 189.6. 3. In the year 2019, the infant mortality rate was 30. 4. As per the Sample Registration System (SRS) Bulletin of Registrar General of India (RGI), the State with the highest infant mortality rate in the year 2019 was Uttar Pradesh. Which of the above statements are correct?

    • a)1, 2 and 3
    • b)2, 3 and 4
    • c)Only 2 and 3
    • d)1 and 4

    Explanation: Statement 1 is incorrect as Infant Mortality Rate (IMR) is expressed per 1000 live births, not 10000. Statement 2 is correct, with India's IMR being around 189.6 in 1950. Statement 3 is correct, as India's IMR was 30 in 2019 according to SRS data. Statement 4 is incorrect; in 2019, Madhya Pradesh had the highest IMR, not Uttar Pradesh. Therefore, only statements 2 and 3 are correct.

26. Q26.Macroeconomics

    Human capital formation as a concept is better explained in terms of a process, which enables 1. individuals of a country to accumulate more capital 2. increasing the knowledge 3. increasing the skill levels 4. increasing the knowledge, skill levels and capacities of the people of the country. Select the correct answer using the codes given below.

    • a)Only 1
    • b)1 and 2
    • c)3 and 4
    • d)Only 4

    Explanation: Human capital formation refers to the process of improving the quality of the workforce through investments in education, training, and health. Statement 4, 'increasing the knowledge, skill levels and capacities of the people of the country,' is the most comprehensive and accurate description of this process, encompassing all key aspects. Statements 2 and 3 are components, but 4 is holistic. Statement 1 refers to physical capital, not human capital.

27. Q27.Banking & Finance

    Consider the following statements regarding insolvency and bankruptcy: 1. Bankruptcy refers to a financial state in which an individual or entity is unable to pay off their debts as they become due. 2. Insolvency refers to a legal process, where the assets of the debtor are liquidated or reorganized for the benefit of creditors. 3. Bankruptcy is a state whereas insolvency is the conclusion. 4. The Insolvency and Bankruptcy Board of India (IBBI) is the regulatory body responsible for overseeing insolvency and bankruptcy proceedings. Which of the above statements is/are correct?

    • a)1, 2 and 3
    • b)2, 3 and 4
    • c)Only 4
    • d)Only 1 and 2

    Explanation: Statement 1 is incorrect: It describes insolvency, not bankruptcy. Insolvency is the financial state of being unable to pay debts. Statement 2 is incorrect: It describes bankruptcy proceedings, not insolvency. Bankruptcy is the legal process. Statement 3 is incorrect: Insolvency is the state, and bankruptcy is the legal conclusion/process. Statement 4 is correct: The IBBI is indeed the regulatory body for insolvency and bankruptcy proceedings in India.

28. Q28.Industrial Policy

    In which year was the Industrial Policy Resolution adopted?

    • a)1956
    • b)1954
    • c)1952
    • d)1950

    Explanation: The Industrial Policy Resolution (IPR) was adopted in 1956. It laid down the basic framework for India's industrial policy, emphasizing the role of the public sector and a mixed economy.

29. Q29.Government Schemes

    Consider the following statements about the Production-Linked Incentive (PLI) scheme: 1. The scheme offers a production-linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components. 2. The scheme has two categories of applicants, namely, global companies and domestic companies. 3. The scheme shall extend an average incentive of around 8% on net incremental sales (over base year) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of six years. 4. The target segment under PLI shall include (i) laptops, (ii) tablets, (iii) all-in-one PCs, (iv) servers and (v) Ultra-Small Form Factor (USFF). Which of the above statements are incorrect?

    • a)1 and 4
    • b)2 and 4
    • c)1 and 3
    • d)2 and 3

    Explanation: Statement 1 is correct. The PLI scheme was initially launched for mobile phone manufacturing and specified electronic components. Statement 4 is correct. These are indeed the target segments for the PLI scheme for IT Hardware. Statement 3 is incorrect. The incentive rate for most PLI schemes, including mobile phones, is typically in the range of 4-6% (decreasing over years), not 8%, and the period is usually 5 years, not 6 years. Statement 2 is incorrect if interpreted broadly for all PLI schemes, as applicant categories can vary across the 14 different sectors. While the mobile PLI scheme did have global and domestic categories, this is not universally true for all PLI schemes. Thus, statements 2 and 3 are incorrect.

30. Q30.Macroeconomics

    Which of the following factors could potentially contribute to stagflation in the Indian economy? 1. High inflationary pressures due to increased Government spending. 2. Decline in industrial production and sluggish economic growth. 3. Decrease in aggregate demand and consumer spending. 4. Appreciation of the domestic currency leading to reduction of export competitiveness. Select the correct answer using the codes given below.

    • a)Only 1 and 2
    • b)Only 2 and 3
    • c)Only 1, 3 and 4
    • d)1, 2, 3 and 4

    Explanation: Stagflation is characterized by high inflation and slow economic growth (stagnation). Statement 1 (high inflationary pressures due to increased government spending) contributes to the inflation component. Statement 2 (decline in industrial production and sluggish economic growth) contributes to the stagnation component. Statement 3 (decrease in aggregate demand) typically leads to lower inflation or deflation, not stagflation. Statement 4 (currency appreciation) tends to reduce imported inflation, not increase overall inflationary pressures, although it can hurt growth. Therefore, only 1 and 2 contribute to stagflation.

31. Q31.Foreign Investment

    As per the Economic Survey, 2023, which of the following statements describe(s) the trend of Foreign Direct Investment in India? 1. It has decreased due to the less participation of the private sector. 2. It has increased compared to the prepandemic levels. 3. It has increased rapidly without decreasing in any Financial Year after the telecom sector was entirely reformed. 4. It has decreased due to a weak global economic situation. Select the correct answer using the codes given below.

    • a)Only 1 and 3
    • b)2 and 4
    • c)1, 2 and 3
    • d)Only 4

    Explanation: As per the Economic Survey 2023, FDI inflows into India have generally shown resilience. Statement 2 is correct, as total FDI inflows in FY22 were higher than pre-pandemic levels. Statement 4 is also correct, as the Survey noted a moderation or decrease in FDI equity inflows in the first half of FY23, attributing it to a weak global economic situation. Statement 1 is incorrect as private sector participation is not the primary driver of FDI trends in this context. Statement 3 is incorrect because FDI flows are subject to global and domestic economic conditions and do not increase rapidly without any decrease in any financial year.

32. Q32.Public Finance

    Which of the following statements about non-plan expenditures of the Central Government is correct?

    • a)The expenditure is on interest payments.
    • b)The expenditure is on science and technology.
    • c)The expenditure is on agriculture.
    • d)None of the above

    Explanation: Non-plan expenditures are typically recurring expenditures that are necessary for the day-to-day functioning of the government and do not create assets. Interest payments on government debt are a major and consistent component of non-plan expenditure. Expenditures on science and technology or agriculture can be both plan and non-plan, depending on whether they are for new schemes/projects or ongoing administrative costs, but interest payments are a clear example of non-plan expenditure.

33. Q33.Globalization

    Which of the following is not true about globalization and its impact on India?

    • a)It has expanded trade in goods and services.
    • b)It has led to greater flow of Foreign Direct Investment.
    • c)Increase in exports is greater than increase in imports.
    • d)None of the above

    Explanation: Globalization has indeed expanded trade in goods and services and led to a greater flow of Foreign Direct Investment in India. However, India has historically run a trade deficit, meaning that the increase in imports has generally been greater than the increase in exports, or imports have consistently outpaced exports. Therefore, the statement 'Increase in exports is greater than increase in imports' is not true.

34. Q34.Public Finance

    Consider the following statements about the latest developments in the Union Government finances: 1. The fiscal deficit of the Union Government had reached 9.2 percent of GDP during the pandemic FY21. 2. The fiscal deficit has moderated to 7.7 percent of GDP in FY22. 3. The revenue collection over the last two years has gone down. Which of the above statements is/are correct?

    • a)Only 1
    • b)1 and 2
    • c)2 and 3
    • d)None of the above

    Explanation: Statement 1 is correct: The fiscal deficit of the Union Government reached 9.2% of GDP in FY21 (Revised Estimate). Statement 2 is incorrect: The fiscal deficit for FY22 moderated to 6.7% of GDP (Revised Estimate), not 7.7%. Statement 3 is incorrect: Revenue collection, especially tax revenue, has shown robust growth in FY22 and FY23, recovering strongly after the pandemic. Therefore, only statement 1 is correct.

35. Q35.External Sector

    Which of the following are the objectives of the SEZ Act, 2005? 1. Generation of additional economic activity 2. Promotion of exports of goods and services 3. Creation of employment

    • a)1, 2 and 3
    • b)2 and 3 only
    • c)1 and 3 only
    • d)More than one of the above
    • e)None of the above
36. Q36.Agriculture

    What is the policy measure adopted by the Government of India to improve the system of agricultural marketing?

    • a)Minimum Support Price (MSP)
    • b)Maintenance of Buffer Stock
    • c)Public Distribution System (PDS)
    • d)More than one of the above
    • e)None of the above
37. Q37.Economic Reforms

    Which committee suggested the enactment of the Competition Act, 2002?

    • a)Rangarajan Committee
    • b)S. V. S. Raghavan Committee
    • c)Vijay Kelkar Committee
    • d)More than one of the above
    • e)None of the above
38. Q38.Agriculture

    Match List-I with List-II: List-I: a. Grey Revolution b. Pink Revolution c. Silver Revolution d. Red Revolution; List-II: 1. Onion production 2. Tomato and meat production 3. Production of eggs 4. Fertilizers

    • a)a-4 b-1 c-3 d-2
    • b)a-3 b-1 c-4 d-2
    • c)a-1 b-4 c-2 d-3
    • d)More than one of the above
    • e)None of the above
39. Q39.Planning

    Which of the following Five-Year Plans was focussed on Human Resource Development?

    • a)First
    • b)Third
    • c)Fifth
    • d)More than one of the above
    • e)None of the above
40. Q40.External Sector

    Which of the following States of India received the highest Foreign Direct Investment (FDI) equity flow during April to September 2022?

    • a)Karnataka
    • b)Tripura
    • c)Gujarat
    • d)More than one of the above
    • e)None of the above
41. Q41.External Sector

    In which budget did the Finance Minister announce the Liberalized Exchange Rate Management System?

    • a)Union Budget, 1991-1992
    • b)Union Budget, 1992-1993
    • c)Union Budget, 1993-1994
    • d)More than one of the above
    • e)None of the above
42. Q42.Planning

    Which of the following were goals of the Five-Year Plans? 1. Growth 2. Modernization 3. Self-reliance 4. Literature

    • a)1, 3 and 4 only
    • b)2, 3 and 4 only
    • c)1, 2 and 4 only
    • d)More than one of the above
    • e)None of the above
43. Q43.Poverty & Inequality

    Which organization carries out the survey for determining the poverty line?

    • a)NSSO
    • b)NITI Aayog
    • c)RBI
    • d)More than one of the above
    • e)None of the above
44. Q44.External Sector

    The trade balance of India (merchandise and services) for December 2022 (provisional) is

    • a)(-) 10.50 USD billion
    • b)(+) 11.98 USD billion
    • c)(-) 11.98 USD billion
    • d)More than one of the above
    • e)None of the above