Indian Economy and Institutions for CUET General Aptitude

AnswerC · The Reserve Bank of India Act, 1934

1. The RBI Act was passed in 1934 and the Bank began operations on 1 April 1935.

2. The Banking Regulation Act of 1949 came later and governs the banks the RBI supervises, not the RBI itself.

3. So the year in the Act's name and the year the Bank opened are deliberately one apart.

AnswerC · The Governor of the Reserve Bank of India

1. The MPC has six members: three from the Reserve Bank and three appointed by the central government.

2. The Governor of the RBI chairs it, and holds a casting vote if the six are evenly split.

3. The government appoints half the committee but does not chair or vote in it.

AnswerC · Mumbai

1. The RBI's central office is in Mumbai.

2. It started in Calcutta in 1935 and moved to Bombay permanently in 1937, which is why Kolkata is the tempting wrong answer.

AnswerA · the RBI lends short-term money to banks against government securities

1. In a repo, a bank sells government securities to the RBI and agrees to buy them back, so in effect it borrows from the RBI for a short period.

2. The repo rate is the policy rate the Monetary Policy Committee sets. Raising it makes borrowing dearer and is used to fight inflation.

AnswerD · The Consumer Price Index (Combined)

1. Under the flexible inflation targeting framework the target is four per cent, with a tolerance band of two percentage points either side.

2. It is written against the Consumer Price Index (Combined), which covers rural and urban India together.

3. The Wholesale Price Index is a different series with no services in it at all, and is not the target.

AnswerB · The Cash Reserve Ratio

1. The Cash Reserve Ratio is held as cash with the RBI and earns the bank nothing.

2. The Statutory Liquidity Ratio is held by the bank itself, in cash, gold or approved securities, and does earn a return.

3. The distinction is where the money sits, not how much of it there is.

AnswerC · The Ministry of Finance, Government of India

1. The Reserve Bank issues every currency note except one.

2. The one-rupee note is issued by the Ministry of Finance and carries the signature of the Finance Secretary, not the Governor.

3. Coins are likewise issued by the Government of India, under the Coinage Act.

AnswerB · The Standing Deposit Facility

1. The Standing Deposit Facility, introduced in April 2022, lets banks deposit surplus money with the RBI without the RBI having to give securities in return.

2. It replaced the fixed-rate reverse repo as the floor of the corridor. The Marginal Standing Facility is the ceiling, where banks borrow at a penal rate.

AnswerC · Fourteen

1. Fourteen banks were nationalised in July 1969.

2. A second round in 1980 took six more, making twenty in all.

3. The figure asked for is almost always one of these two, so the year in the question decides the answer.

AnswerB · The National Payments Corporation of India

1. UPI is built and run by the National Payments Corporation of India.

2. NPCI is a not-for-profit company set up by the RBI and the Indian Banks' Association, so the RBI is behind it without operating it.

3. RuPay, IMPS and the National Automated Clearing House come from the same organisation.

AnswerD · The Imperial Bank of India

1. The Imperial Bank of India was nationalised and renamed the State Bank of India on 1 July 1955.

2. The Imperial Bank had itself been formed in 1921 by merging the three presidency banks of Bengal, Bombay and Madras.

AnswerC · The Deposit Insurance and Credit Guarantee Corporation

1. The DICGC is a wholly owned subsidiary of the Reserve Bank and insures deposits up to five lakh rupees per depositor per bank.

2. The cover is per bank, so two accounts at the same bank share one limit while accounts at two banks have two.

3. IRDAI regulates insurance companies but does not itself insure anything.

AnswerB · Cash, gold or approved securities held by the bank itself

1. The SLR is held by the bank on its own books, in cash, gold or securities the RBI has approved.

2. Because approved securities pay interest, the SLR costs a bank far less than the CRR does.

3. Cash lodged with the Reserve Bank is the Cash Reserve Ratio, which is the other requirement.

AnswerB · 1975

1. The first Regional Rural Banks were set up on 2 October 1975; the Regional Rural Banks Act followed in 1976.

2. Each is owned jointly by the Centre, the state government and a sponsor bank.

3. 1969 is the first bank nationalisation and 1982 the founding of NABARD.

AnswerB · Give loans or issue credit cards

1. Payments banks were licensed from 2015 to bring deposits and payments to people outside the banking system.

2. They may take deposits up to a limit set by the RBI and issue debit cards, but they may not lend or issue credit cards.

AnswerD · The Second Schedule of the Reserve Bank of India Act, 1934

1. The list is the Second Schedule of the RBI Act, 1934.

2. A bank on it can borrow from the RBI and take part in the clearing system, and must in return keep the required reserves.

3. The term therefore has a precise statutory meaning rather than describing a bank's size.

AnswerD · Five hundred and one thousand rupees

1. The five hundred and one thousand rupee notes then in circulation ceased to be legal tender.

2. A new five hundred rupee note was issued afterwards; the thousand was not reissued.

3. The two thousand rupee note was introduced after the announcement, so it cannot be one of the notes withdrawn by it.

AnswerB · It excludes services entirely

1. The WPI tracks goods traded in bulk between businesses, and carries no services at all.

2. The CPI measures what a household actually spends on, so rent, school fees, transport and medical care are all in it.

3. That is why services inflation shows up in one index and is invisible in the other.

AnswerD · Disinflation

1. Disinflation is a fall in the rate of inflation while the rate stays positive.

2. Deflation is different: it is a fall in the price level itself, which means a negative rate.

3. So disinflation still means things are getting dearer, only less quickly.

AnswerD · Gresham's law

1. Gresham's law says that when two coins circulate at the same official value but differ in metal content, people spend the debased one and hoard the sound one.

2. The good money therefore disappears from circulation, leaving the bad in use.

3. It holds only where the law forces both to be accepted at the same value.

AnswerD · D. Udaya Kumar

1. D. Udaya Kumar's design was chosen in July 2010. It joins the Devanagari 'र' with the Roman 'R' and adds two lines that also suggest the national flag.

2. Pingali Venkayya designed the forerunner of the national flag, and Nandan Nilekani led the Aadhaar project.

AnswerA · M3

1. M1 is narrow money: currency with the public plus demand deposits with banks.

2. M3 adds time deposits with banks to M1, and it is the measure the RBI calls broad money.

3. M0 is reserve money, the base the RBI itself creates.

AnswerD · The Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade

1. The WPI is compiled by the Office of the Economic Adviser, which sits in DPIIT under the Ministry of Commerce and Industry.

2. The Consumer Price Index comes from a different ministry altogether: the National Statistical Office, under Statistics and Programme Implementation.

3. Two price indices, two ministries, and the pairing is the whole question.

AnswerB · 2017

1. The Railway Budget was presented separately from 1924 until 2016.

2. From 2017 it was merged into the Union Budget, ending ninety-two years of separate presentation.

3. The Budget date moved to the first of February in the same year.

AnswerA · 1 February

1. From 2017 the Budget was moved from the last working day of February to 1 February.

2. The earlier date meant spending approvals often came after the financial year had begun on 1 April; the new date lets Parliament pass them in time.

AnswerC · from 1 April to 31 March

1. The Union and state governments, and most companies, keep their accounts from 1 April to 31 March.

2. So '2025-26' means the year from 1 April 2025 to 31 March 2026.

AnswerA · The Annual Financial Statement, Article 112

1. Article 112 requires an annual financial statement of the government's estimated receipts and expenditure to be laid before Parliament.

2. The word 'budget' does not appear in the Constitution at all.

3. Article 110 is the definition of a Money Bill, which is a related but separate provision.

AnswerA · The Chief Economic Adviser

1. The Survey is prepared in the Department of Economic Affairs, Ministry of Finance, under the Chief Economic Adviser.

2. It is tabled in Parliament a day before the Budget and reviews the year that has passed.

3. It is a review and an argument, not a statement of what the government will spend.

AnswerA · Total receipts excluding borrowings

1. The fiscal deficit is total expenditure minus total receipts other than borrowings.

2. It therefore measures exactly how much the government must borrow in the year.

3. Counting borrowings as receipts would make the figure zero by construction, which is why they are excluded.

AnswerC · The primary deficit

1. The primary deficit is the fiscal deficit less interest payments.

2. It strips out the cost of past borrowing and shows the shortfall created by this year's decisions alone.

3. The revenue deficit is a different subtraction: revenue expenditure minus revenue receipts, which says nothing about interest.

AnswerB · Income tax

1. A direct tax is paid to the government by the same person who bears it.

2. Income tax is paid by the person whose income is taxed, so it is direct.

3. GST, customs and excise are all collected from a seller who passes the cost on to the buyer, which makes them indirect.

AnswerD · 1 July 2017

1. GST was launched at a special midnight session of Parliament and took effect on 1 July 2017.

2. It replaced many separate taxes, such as central excise, service tax and state VAT, with one tax on the supply of goods and services.

AnswerD · the Income Tax Department

1. PAN is a ten-character identity number issued by the Income Tax Department, under the Central Board of Direct Taxes.

2. The Unique Identification Authority issues Aadhaar, which is a different number.

AnswerC · The One Hundred and First Amendment

1. The One Hundred and First Amendment Act was passed in 2016 and made GST constitutionally possible.

2. The tax itself came into force on 1 July 2017, a year after the Amendment.

3. The Amendment year and the rollout year are different, and a question may ask for either.

AnswerD · The Union Finance Minister

1. The GST Council is created by Article 279A and is chaired by the Union Finance Minister.

2. Every state and union territory with a legislature sends a minister, and one of them is chosen as Vice-Chairperson.

3. Decisions need a three-fourths majority of the weighted votes, with the Centre holding one third of the total.

AnswerA · IGST

1. An inter-state supply attracts Integrated GST, which is levied and collected by the Centre.

2. The Centre then apportions the state's share to the state where the goods are consumed.

3. CGST and SGST together apply only when the supply stays within one state.

AnswerA · Petrol

1. Five petroleum products, namely crude oil, petrol, diesel, natural gas and aviation turbine fuel, are within the GST law but will be taxed under it only from a date the GST Council recommends.

2. Until then they carry central excise duty and state VAT. Alcohol for drinking is kept out of GST by the Constitution itself.

AnswerB · The Central Board of Direct Taxes

1. The Central Board of Direct Taxes administers income tax and corporation tax.

2. The Central Board of Indirect Taxes and Customs handles GST, customs and central excise.

3. Both sit under the Department of Revenue in the Ministry of Finance, which is why they are so easily swapped.

AnswerB · 1 January 2015

1. NITI Aayog came into being on 1 January 2015.

2. The decision had been announced from the Red Fort on 15 August 2014, which is the date often confused with it.

3. NITI stands for National Institution for Transforming India.

AnswerA · The Prime Minister

1. The Prime Minister is Chairperson by virtue of office.

2. Day-to-day work is led by a Vice-Chairperson appointed by the government, and by a Chief Executive Officer.

3. The Governing Council brings in the Chief Ministers of all the states and the Lieutenant Governors of union territories.

AnswerB · 1951 to 1956

1. The First Plan ran from 1951 to 1956 and gave priority to agriculture and irrigation.

2. 1956 to 1961 is the Second Plan, and 1961 to 1966 the Third.

AnswerB · The Second Plan

1. The Second Plan, from 1956 to 1961, followed the model of P. C. Mahalanobis and directed investment into capital goods and heavy industry.

2. The First Plan, from 1951 to 1956, had been built on the Harrod-Domar model and concentrated on agriculture and irrigation after Partition.

3. The Industrial Policy Resolution of 1956, which reserved core industries for the state, belongs to the same moment.

AnswerC · The Twelfth Plan

1. The Twelfth Plan ran from 2012 to 2017 and was the last one.

2. No Thirteenth Plan was drawn up, because the Planning Commission had been replaced two years before it would have begun.

3. NITI Aayog works through documents with different horizons instead of a single five-year plan.

AnswerC · The National Development Council

1. The National Development Council was set up in 1952 to bring the states into planning.

2. The Planning Commission drafted each plan, and the Council, with the Prime Minister and all Chief Ministers, approved it.

3. After 2015 its role passed in practice to the Governing Council of NITI Aayog.

AnswerA · A resolution of the Union Cabinet

1. The Planning Commission was set up by a Cabinet resolution in March 1950.

2. It was neither a constitutional body nor a statutory one, and had no powers of its own in law.

3. NITI Aayog, which replaced it, was created the same way — by a Cabinet resolution.

AnswerA · The Securities and Exchange Board of India

1. SEBI regulates stock exchanges, listed companies, brokers and mutual funds.

2. It was set up in 1988 and given statutory powers by the SEBI Act of 1992.

3. Four years therefore separate the body's creation from the Act that gave it teeth.

AnswerB · IRDAI

1. The Insurance Regulatory and Development Authority of India was set up under an Act of 1999 and regulates life and general insurers.

2. It is based in Hyderabad.

AnswerD · The Pension Fund Regulatory and Development Authority

1. PFRDA regulates the National Pension System and the pension fund managers within it.

2. IRDAI is the insurance regulator, and annuity products sold by insurers fall to it instead.

3. EPFO runs the Employees' Provident Fund; it administers a scheme rather than regulating an industry.

AnswerC · The National Bank for Agriculture and Rural Development

1. NABARD was established in 1982 and refinances the cooperative banks and regional rural banks that actually lend to farmers.

2. It supervises those banks as well as funding them.

3. It lends to institutions rather than to farmers directly, which is what 'apex' means here.

AnswerA · The Small Industries Development Bank of India

1. SIDBI was set up in 1990 as the apex institution for small industry.

2. It refinances banks and lends to institutions that serve small enterprises, in the same way NABARD does for rural credit.

3. The National Housing Bank plays the equivalent role for housing finance.

AnswerA · the BSE and the National Stock Exchange respectively

1. The Sensex tracks 30 large companies listed on the BSE, Asia's oldest stock exchange, founded in 1875.

2. The Nifty 50 tracks 50 companies on the National Stock Exchange.

AnswerC · Telecommunications

1. The Telecom Regulatory Authority of India was set up in 1997 to regulate telecom services and tariffs.

2. Its remit also covers broadcasting and cable services.

AnswerA · The Competition Act, 2002, replacing the MRTP Commission

1. The Competition Act of 2002 created the Competition Commission of India.

2. It replaced the Monopolies and Restrictive Trade Practices Commission, which had worked under the MRTP Act of 1969.

3. The shift in thinking is in the names: the older law was aimed at bigness, the newer one at conduct that harms competition.

AnswerD · Services

1. Services such as trade, transport, finance, real estate, and public administration together produce more than half of India's GVA.

2. Agriculture's share is much smaller, even though it employs the largest number of workers.

AnswerC · Fishing

1. The primary sector takes goods directly from nature: farming, forestry and fishing.

2. Manufacturing and construction are secondary, and banking is a service, so it is tertiary.

AnswerD · The National Statistical Office, Ministry of Statistics and Programme Implementation

1. The National Statistical Office, under the Ministry of Statistics and Programme Implementation, compiles the national accounts.

2. It was formed in 2019 by merging the Central Statistics Office with the National Sample Survey Office.

3. The older names still appear in older documents, and refer to the parts rather than to a different body.

AnswerA · Dadabhai Naoroji

1. Dadabhai Naoroji published the first estimate, in Poverty and Un-British Rule in India.

2. The estimate was part of his drain of wealth argument, which used the figure politically.

3. V. K. R. V. Rao made the first scientific estimate later, in the 1930s.

AnswerB · A pension paid by the government to a retired employee

1. GDP counts the value of goods and services produced in the year.

2. A pension is a transfer payment: money changes hands, but nothing is produced in exchange for it in that year.

3. A salary, a hospital fee and a rent are all payments for something currently supplied, so all three are counted.

AnswerB · Adding product taxes and subtracting product subsidies

1. GVA at basic prices is what producers receive; GDP at market prices is what buyers pay.

2. The difference is the product taxes that are added to the price and the product subsidies that are taken off it.

3. So GDP equals GVA plus product taxes minus product subsidies.

AnswerB · Net National Product at factor cost

1. National income is Net National Product at factor cost.

2. 'Net' means depreciation has been deducted; 'national' means income earned abroad by residents is counted and income earned here by non-residents is not.

3. 'At factor cost' means indirect taxes are removed and subsidies added back, so what remains is what went to the factors of production.

AnswerC · The International Monetary Fund and the World Bank

1. The conference created the International Monetary Fund and the International Bank for Reconstruction and Development, which became the World Bank.

2. A third body, an international trade organisation, was proposed but never came into being.

3. Trade was instead handled by the GATT until the WTO was founded fifty years later.

AnswerB · Washington, D.C.

1. Both Bretton Woods institutions are based in Washington, D.C., a few streets apart.

2. New York is the headquarters of the United Nations, and Geneva of the WTO.

AnswerC · 1 January 1995

1. The WTO came into being on 1 January 1995.

2. It was the outcome of the Uruguay Round, which ran from 1986 to 1994.

3. The GATT itself had been in force since 1948 as an agreement rather than an organisation.

AnswerB · The International Monetary Fund

1. SDRs are an international reserve asset created by the IMF and allocated to member countries in proportion to their quotas.

2. An SDR is not a currency: its value is set from a basket of major currencies and it can be exchanged for them.

3. A country's quota at the IMF is stated in SDRs, and so is its voting share.

AnswerD · Geneva

1. The WTO's secretariat is in Geneva, Switzerland, which also hosts many UN agencies.

2. Paris is home to the OECD, and Brussels to the European Union's main institutions.

AnswerC · Shanghai

1. The New Development Bank has its headquarters in Shanghai.

2. It was agreed at the BRICS summit in Fortaleza in 2014 and began operations in 2015.

3. Beijing is the headquarters of a different institution, the Asian Infrastructure Investment Bank.

AnswerA · The International Development Association

1. The International Development Association lends to the poorest countries on concessional terms.

2. The IBRD lends to middle-income countries at close to market rates, and the two together are what is usually meant by 'the World Bank'.

3. The International Finance Corporation lends to the private sector rather than to governments.

AnswerA · Manila

1. The Asian Development Bank is headquartered in Manila, the Philippines.

2. Japan and the United States are its largest shareholders, and its presidents have traditionally been Japanese, which is why Tokyo is the tempting option.

3. Beijing is the headquarters of the Asian Infrastructure Investment Bank, a different institution.

AnswerD · One hundred days to every rural household whose adult members volunteer for unskilled manual work

1. The guarantee is of a hundred days in a financial year, and it is given to a household rather than to a person.

2. The household must have adult members volunteering to do unskilled manual work.

3. The scheme is rural only; there is no urban counterpart in the same Act.

AnswerD · Universal access to a bank account and to basic financial services

1. Jan Dhan is a financial inclusion scheme, opening zero-balance accounts with a RuPay card and an accident cover.

2. The account is the entry point for the rest: a subsidy transferred straight to a beneficiary needs an account to go into.

3. Crop insurance is a different scheme, Pradhan Mantri Fasal Bima Yojana.

AnswerA · ₹5 lakh per family per year

1. Pradhan Mantri Jan Arogya Yojana, launched in 2018, gives cover of up to ₹5 lakh per family per year for hospital treatment.

2. Treatment is cashless at empanelled public and private hospitals.

AnswerB · The Periodic Labour Force Survey

1. The Periodic Labour Force Survey is conducted by the National Statistical Office and began in 2017.

2. It replaced the employment and unemployment surveys that had been run only once every five years.

3. Since its sampling design was revamped in January 2025 it publishes monthly all-India estimates for rural and urban areas, alongside quarterly and annual ones.

AnswerA · It pays the money into the beneficiary's own bank account instead of subsidising the goods

1. Under DBT the money goes into the beneficiary's own bank account rather than being used to sell a good below cost.

2. The beneficiary then buys at the market price, so the shortening of the chain is the whole point.

3. The amount is a separate decision; DBT changes the route, not the size.

AnswerD · ₹6,000 a year, in three instalments

1. PM-KISAN, launched in 2019, pays ₹6,000 a year to eligible landholding farmer families.

2. It is paid in three instalments of ₹2,000 each, straight into the farmers' bank accounts by Direct Benefit Transfer.

AnswerA · The Tendulkar Committee, revisited by the Rangarajan Committee

1. The Tendulkar Committee reported in 2009 and its methodology was adopted for the official poverty estimates.

2. The Rangarajan Committee was set up afterwards and reported in 2014 with a higher poverty line and therefore a higher poverty count.

3. The Lakdawala Committee came before both, in 1993.