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Economic Survey 2016-17 for IAS Prelims: Economic Outlook and Policy Challenges Part 2

Feb 9, 2017 17:41 IST

    Economy Survey chapter 1IAS Questions contain an exclusive section specially designed from the Economic Survey 2016-2017. Economic survey 2016-17 is important for IAS aspirants because it contains previous 12 month’s complete reviews of the macroeconomic indices and prospects of Indian Economy in the short to medium term.

    Union Budget 2017 Questions for IAS Exam

    In the IAS Prelims exam, every year few questions are directly asked from the economic survey as it is the most important document regarding the socioeconomic policies of India.

    The Economic Survey of India is an annual document of the Ministry of Finance, Government of India. The Finance Ministry of India presents the Economic Survey in the parliament every year, just before the Union Budget.

    Current Affairs Quizzes for January 2017

    Here, we provide exclusive questions on Economic Survey 2017 which can prove to be extremely helpful in IAS Prelims 2017 preparation.

    1. According to economic survey 2016-2017, Inflation remained under control for the third successive financial year. Consider the following indices related to Inflation in the country:

    1) The average Consumer Price Index (CPI) inflation declined in 2015-16.
    2) Food inflation based on consumer food price index (CFPI) increased in 2015-2016.
    3) The average inflation based on Wholesale Price Index (WPI) declined in 2015-2016.

    Which of the above statements is correct?

    a. Only 1
    b. 1 and 3
    c. 1 and 2
    d. 1, 2 and 3

    Answer: b

    Explanation:

    Inflation remained under control for the third successive financial year. Some crucial analysis related to inflation is as follows:

    • The average Consumer Price Index (CPI) inflation declined from 5.9 percent in 2014-15 to 4.9 percent in 2015-16.
    • In the current financial year till December, CPI inflation averaged 4.8 percent and eased to 3.4 percent in December 2016 backed by sharp fall in food prices.
    • Food inflation based on consumer food price index (CFPI) declined to 4.9 percent in 2015-16 from 6.4 percent in 2014-15.
    • It averaged 5.1 percent in the current financial year till December and dropped to 1.4 percent in December 2016 following a sharp correction in pulses and vegetable prices.
    • The CPI-based core inflation (excluding food and fuel group) has remained sticky, so far during this fiscal year and averaged 4.8 per cent as compared to 4.6 percent in 2015-16.
    • The average inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 percent in 2014-15.
    • The downward trend, however, has reversed during the current financial year, partly due to the impact of the rise in global commodity prices.
    • WPI inflation averaged 2.9 percent in the current financial year till December 2016 and stood at 3.4 percent in December 2016.

    Economic Outlook and Policy Challenges Part 1

    2. Consider the following observations or estimates made by the Economic Survey regarding the Exports and Imports of the country:

    1) The exports of goods and services are estimated to grow in 2016-2017.
    2) The imports are projected to increase in 2016- 17.
    3) The growth in fixed investment at constant prices declined to (-) 0.2 per cent in 2016-17.

    Which of the above statements is correct?

    a. Only 1
    b. 1 and 2
    c. 1 and 3
    d. 1, 2 and 3

    Answer: c

    Explanation:

    From the demand angle, the expansion in government final consumption expenditure has been the major driver of growth. The growth in fixed investment at constant prices declined from 3.9 percent in 2015-16 to (-) 0.2 per cent in 2016-17.

    The exports of goods and services are estimated to grow by 2.2 per cent, whereas the imports are projected to decline by 3.8 percent in 2016- 17.
    The growth in agriculture, industry and services is estimated at 4.1 per cent, 5.2 per cent and 8.8 per cent in 2016-17 as opposed to 1.2 per cent, 7.4 per cent and 8.9 per cent respectively in 2015-16.

    The growth rate of industry sector declined in 2016-17 mainly on account of contraction in mining & quarrying and moderation of growth in the manufacturing sector. It was the services sector, led by public administration, defence and other services that resulted in the overall GVA growth rate of 7.0 percent in 2016-17.

    Economic Survey 2016-17 for IAS Prelims: Fiscal Rules

    3. Consider the following observations made by the Economic Survey regarding the annual GDP and trade in the country:

    1) The economy is estimated to grow at 7.1 percent in 2016-17, as compared to the growth of 7.6 per cent achieved in 2015-16.
    2) Nominal GDP growth recovered to respectable levels in the past year.
    3) The Exports declined as the demand in advanced countries began to decrease.

    Which of the above statements is correct?

    a. Only 1
    b. 1 and 2
    c. 2 and 3
    d. 1, 2 and 3

    Answer: b

    Explanation:

    The Indian economy has continued to consolidate the gains achieved in restoring macroeconomic stability. Real GDP growth in the first half of the year was 7.2 percent and somewhat lower than the 7.6 percent rate recorded in the second half of 2015-16. The main problem was fixed investment, which declined sharply as stressed balance sheets in the corporate sector continued to take a toll on firms’ spending plans.

    On the positive side, the long-awaited start of an export recovery started as demand in advanced countries began to accelerate. Nominal GDP growth recovered to respectable levels, reversing the sharp and worrisome dip that had occurred in the first half of 2015-16.

    Economic Survey 2016-17 for IAS Prelims: Review of Economic Development

    4.  Consider the following observations made by economic survey regarding the sectoral growth in the country in 2016-2017:

    1) The growth rate of industry sector declined in 2016-17 mainly on account of contraction in mining & quarrying and moderation of growth in the manufacturing sector.
    2) The modest down in the agricultural growth is expected on the back of bad monsoon in 2016-2017.
    3) The growth in agriculture is estimated at 4.1 percent.

    Which of the above statements is correct?

    a. Only 1
    b. 1 and 2
    c. 1 and 3
    d. 1, 2 and 3

    Answer: c

    Explanation:

    The growth in agriculture, industry and services is estimated at 4.1 per cent, 5.2 per cent and 8.8 per cent in 2016-17 as opposed to 1.2 per cent, 7.4 per cent and 8.9 per cent respectively in 2015-16.

    The major highlights of the sectoral growth outcome of 2016-17 were:

    • The growth rate of industry sector declined in 2016-17 mainly on account of contraction in mining & quarrying and moderation of growth in the manufacturing sector.
    • It was the services sector, led by public administration, defence and other services that resulted in the overall GVA growth rate of 7.0 percent in 2016-17.

    5. Which sector majorly responsible for a resulting overall Gross Value Addition (GVA) growth rate of 7.0 percent in 2016-17?

    a. Agricultural Sector
    b. Manufacturing Sector
    c. Corporate Sector
    d. The Services sector

    Answer: d

    Explanation:

    The growth in agriculture, industry and services is estimated at 4.1 per cent, 5.2 per cent and 8.8 per cent in 2016-17 as opposed to 1.2 per cent, 7.4 per cent and 8.9 per cent respectively in 2015-16.

    •  The services sector, led by public administration, defence and other services resulted in the overall GVA growth rate of 7.0 percent in 2016-17.
    •  From the demand angle, the expansion in government final consumption expenditure has been the major driver of growth.
    •  The growth in fixed investment at constant prices declined from 3.9 percent in 2015-16 to (-) 0.2 per cent in 2016-17.

    Union Budget 2017 Questions for IAS Exam Part-1

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