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Indian Economy Basics

General Awareness · Polity, Economy & Geography

Useful for: SSC CGL, Railway RRB, CTET, OTET, OSSTET, REET, UPTET, BPSC TRE

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Overview

Economy items test core concepts — GDP, inflation, banking tools, budget and major institutions — more than numbers.

Key points

GDP is the value of final goods and services produced within a country in a year.
The RBI (established 1935, nationalised 1949) targets CPI inflation of 4% with a band of ±2%.
Repo rate: the rate at which the RBI lends to banks; reverse repo: the rate at which it absorbs funds.
CRR is cash kept with the RBI; SLR is liquid assets kept by banks themselves.
GST began on 1 July 2017; NITI Aayog replaced the Planning Commission on 1 January 2015.

Explanation

Fiscal deficit = total expenditure − (revenue receipts + non-debt capital receipts).
The Union Budget is presented under Article 112 as the Annual Financial Statement.
Primary sector: agriculture; secondary: industry; tertiary: services.
SEBI became a statutory body in 1992.

Step by step

Identify the exact fact asked (person, year, article, place).
Recall it from a linked group, not in isolation.
Eliminate options from the wrong period or category.

Examples

The RBI’s inflation target is → 4% CPI inflation (±2%).
The rate at which the RBI lends to commercial banks → repo rate.
The Budget is presented under → Article 112.

Traps and advanced points

Trap: Confusing repo and reverse repo.
Trap: Mixing CRR (with RBI) and SLR (with the bank).
Trap: Thinking the Planning Commission still makes five-year plans.

Quick revision

Repo = RBI lends.
CPI 4% ± 2%.
GST 2017, NITI 2015.

Practice MCQs

Which measure is commonly used for retail inflation in India?
1. Balance of trade
2. Index of Industrial Production only
3. Consumer Price Index (CPI)
4. Fiscal deficit
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Answer: (c) Consumer Price Index (CPI). Consumer Price Index (CPI) is commonly used for retail inflation in India.
A fiscal deficit broadly measures the excess of total government expenditure over receipts excluding what financing item?
1. Tax revenue
2. Capital receipts other than borrowings
3. Non-tax revenue
4. Borrowings
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Answer: (d) Borrowings. A fiscal deficit broadly measures the excess of total government expenditure over receipts excluding what financing item? — Borrowings.
GST is best described as what type of tax?
1. Direct income tax
2. Indirect tax
3. Wealth tax only
4. Corporate dividend
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Answer: (b) Indirect tax. GST is best described as what type of tax? — Indirect tax.
Reverse repo concept broadly involves RBI absorbing liquidity from whom?
1. School students
2. Exporters only
3. Banks
4. State legislatures
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Answer: (c) Banks. Reverse repo concept broadly involves RBI absorbing liquidity from Banks.
Which term means a fall in the general price level?
1. Inflation
2. Reflation
3. Stagflation
4. Deflation
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Answer: (d) Deflation. Deflation (term) means a fall in the general price level.
The Reserve Bank of India (RBI) was established in which year?
1. 1949
2. 1947
3. 1955
4. 1935
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Answer: (d) 1935. RBI 1935 me sthapit hua (Hilton Young Commission ki sifarish par).
Which body regulates the securities/share market in India?
1. SEBI
2. NABARD
3. SIDBI
4. RBI
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Answer: (a) SEBI. SEBI (Securities and Exchange Board of India) share market regulate karti hai (statutory status 1992).
GST, introduced in India in 2017, is what type of tax?
1. Wealth tax
2. Corporate tax
3. Direct tax
4. Indirect tax
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Answer: (d) Indirect tax. GST (Goods and Services Tax) ek indirect tax hai — 'One Nation, One Tax' (1 July 2017).
The 'Repo Rate' is the rate at which:
1. RBI lends to commercial banks
2. Banks lend to each other
3. Government borrows from public
4. Banks lend to the public
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Answer: (a) RBI lends to commercial banks. Repo Rate = wo rate jis par RBI commercial banks ko short-term loan deta hai.
The nationalisation of 14 major commercial banks in India took place in which year?
1. 1969
2. 1949
3. 1980
4. 1991
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Answer: (a) 1969. 1969 me 14 bade banks nationalise hue (Indira Gandhi govt).
In the Union Budget, the 'Fiscal Deficit' refers to:
1. Total expenditure minus total revenue excluding borrowings
2. Revenue expenditure minus revenue receipts
3. Interest payments only
4. Imports minus exports
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Answer: (a) Total expenditure minus total revenue excluding borrowings. Fiscal Deficit = total expenditure - total revenue (borrowings ko chhodkar).
Which institution is the main regulator for agricultural and rural development finance in India?
1. SEBI
2. NABARD
3. IRDAI
4. SIDBI
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Answer: (b) NABARD. NABARD (National Bank for Agriculture and Rural Development, 1982) agriculture/rural credit ka apex body hai.
The term 'CRR' in banking stands for:
1. Current Reserve Requirement
2. Credit Reserve Rate
3. Cash Reserve Ratio
4. Central Repo Rate
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Answer: (c) Cash Reserve Ratio. CRR = Cash Reserve Ratio — banks ko apni deposits ka ek % RBI ke paas cash me rakhna padta hai.
Which Article of the Constitution relates to the Annual Financial Statement (Union Budget)?
1. Article 265
2. Article 280
3. Article 110
4. Article 112
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Answer: (d) Article 112. Article 112 — Annual Financial Statement (Budget).
If the RBI wants to reduce inflation by controlling money supply, it will generally:
1. Print more currency
2. Decrease repo rate
3. Increase repo rate
4. Reduce CRR
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Answer: (c) Increase repo rate. Inflation kam karne ke liye RBI repo rate badhata hai — isse loans mehnge, log kam kharch karte, demand ghatti, prices control hote.