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Economic Survey 2016-17 for IAS Prelims: The Economic Vision for Precocious, Cleavaged India Part 1

Feb 16, 2017 18:54 IST

    Economy Survey chapter 2 quiz

    Economic survey 2016-17 is important for IAS aspirants because it contains previous 12 month’s complete reviews of the macroeconomic indices, highlights of the policy initiatives of the government and prospects of Indian Economy in the short to medium term.

    ECONOMIC SURVEY 2016-17 IMPORTANT QUESTIONS

    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. IAS Questions contain an exclusive section specially designed from the economic survey 2016-2017.

    Union Budget 2017 Questions for IAS Exam

    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 2016-17, India’s trade to GDP ratio has been rising sharply, particularly over the decade to 2012. Consider the following statements regarding the standard measure trade to GDP ratio:

    1) The trade-to-GDP ratio is the exports plus imports expressed as a share of the gross domestic product.
    2) Large countries lack an internal market and hence they tend to have higher the trade-to-GDP ratios.
    3) India’s trade to GDP ratio now surpasses China.

    Which of the above statements is correct?

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

    Answer: a

    Explanation:

    The trade-to-GDP ratio is the exports plus imports expressed as a share of gross domestic product. A fundamental truth of geography is that large countries tend to trade less than small countries. Being large makes the benefits of trading with the outside world very low relative to trading within the country.

    The opposite is true for small countries: lacking an internal market, their benefits of trading with the world are relatively large and hence they tend to have higher trade-to-GDP ratios.

    India’s transformation is more starkly by comparing the evolution of its trade-GDP ratio with that of China over the past three decades. India’s ratio has been rising sharply, particularly over the decade to 2012, when it doubled to 53 per cent; the recovery from the global financial crisis in 2008 was also swift. As a result, India’s ratio now surpasses China which is remarkable.

    Review of Economic Development

    2. Which of the following statements regarding the India’s foreign capital flows as a share of GDP and the size of public sector enterprises is true?

    a. In the most recent year, FDI in India is running at an annual rate of $75 billion.
    b. India has allowed the private sector entry into civil aviation, telecommunications, and financial services.
    c. Both (a) and (b)
    d. None of the above

    Answer: c

    Explanation:

    India’s foreign capital flows as a share of GDP reveals that despite significant capital controls, India’s net inflows are quite normal compared with other emerging economies. India’s FDI has risen sharply over time. In fact, in the most recent year, FDI is running at an annual rate of $75 billion.

    In popular perception India’s public sector undertakings (PSU) are exceptionally large. However, India is now squarely in the middle of the emerging market pack. This is partly because India has allowed the private sector entry into, amongst others, civil aviation, telecommunications, and financial services. These have all served to reduce the share of the public sector even if there has not been much exit of the PSU enterprises themselves.

    Economic Survey 2016-17 Fiscal Rules

    3. According to economic survey 2016-17, which other countries apart from India have grown as rapidly and been democratic?

    a. Italy, Pakistan, Israel, and Ireland
    b. France, Japan, Israel, and Ireland.
    c. Italy, Mexico, Israel, and Ireland.
    d. Italy, Japan, Israel, and Ireland.

    Answer: d

    Explanation:

    India has grown at about 4.5 percent per capita for thirty seven years, an impressive achievement which is particularly remarkable because it has been achieved under a fully democratic political system. The Indian model of being a perennial democracy after acquiring independence is rare in post-war economic history and successes are rarely democracies.

    The only other countries that have grown as rapidly and been democratic for a comparable proportion of the boom are Italy, Japan, Israel, and Ireland. Other countries that have grown faster for as long have tended to be oil exporters, East Asian countries, and some that recovered after World War II.

    Economic Outlook and Policy Challenges Part 1

    4. According to economic survey 2016-17, the agriculture sector in India is a living legacy of the era of socialism. Consider the following progress made in the agricultural sector in the Union Budget 2017:

    1) Coverage of National Agricultural Market (e-NAM) to be expanded from to 585 APMCs.
    2) A model law on contract farming to be prepared and circulated among the States for adoption.
    3) Dairy Processing and Infrastructure Development Fund to be set up in NABARD.

    Which of the above statements is correct?

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

    Answer: c

    Explanation:

    The agricultural sector reforms in the Union Budget 2017 are as follows:

    • Farmers will benefit from 60 days’ interest waiver scheme.
    • Coverage under Fasal Bima Yojana scheme will be increased to 40% in 2017-18.
    • New mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648 KVKs in the country for soil sample testing
    • Coverage of National Agricultural Market (e-NAM) will be expanded from to 585 APMCs.
    • A model law on contract farming to be prepared and circulated among the States for adoption
    • A dairy processing and infrastructure development fund will be set up in NABARD.

    5. According to economic survey 2016-17, the twin balance sheet problem in the corporate and banking sectors remains a millstone in Indian economy. What is twin balance sheet problem?

    a. Overleveraged and distressed companies
    b. The rising NPAs in Public Sector Bank balance sheets
    c. None of the above
    d. Both (a) and (b)

    Answer: d

    Explanation:

    The Economic Survey devotes considerable attention to what it terms India's Twin Balance Sheet problem - overleveraged and distressed companies and the rising NPAs in Public Sector Bank balance sheets. The twin balance sheet problem in the corporate and banking sectors remains a millstone around the economy’s neck, casting a pall over private investment and hence aggregate growth.

    One important reason this problem has not been resolved in the many years since it emerged in 2010 is the political difficulty in being seen as favouring the private sector, a problem which will necessarily arise in cases where some private sector debts have to be forgiven.

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