APPSC Group-I Prelims 2010

382 questions from the 2010 papers, each with the official answer and an explanation.

A question repeated across years is listed once, under one of the years it appeared.

121. Q121Planning, reform and the shape of policy

     The famous plan introduced by the Government of India in the early 1990s to tackle the economic crisis:

     • aPrivatization of core sector industries
     • bSignificantly reducing government employees
     • cStructural Adjustment ProgramAnswer
     • dRupee convertibility for current account purposes
     ›Explanation

     Option C is correct because India introduced the Structural Adjustment Program under the guidance and conditionality of the International Monetary Fund and the World Bank to restore macroeconomic stability and promote growth. Option A: core sector privatization was only a partial and selective element rather than the overarching plan name. Option B: large-scale retrenchment of government employees was not adopted as the national reform framework. Option D: rupee convertibility on the current account was a specific exchange rate reform achieved later in 1994, not the comprehensive plan itself.

122. Q122Planning, reform and the shape of policy

     Abolition of state permission and regulations regarding foreign trade is a characteristic of what?

     • a2000-2001 'EXIM' Policy
     • bForeign Exchange Regulation Act
     • c2002-2007 'EXIM' Policy
     • dNew Industrial Policy of 1991Answer

     Official answer shown. The explanation is under review.

123. Q123Planning, reform and the shape of policy

     The economic development model of Liberalization, Privatization, and Globalization assigns a key role to which of the following?

     • aForeign Direct Investment
     • bInformation Technology
     • cPrivate SectorAnswer
     • dPublic Private Partnership
     ›Explanation

     Option C is correct because the core philosophy of the Liberalization, Privatization, and Globalization model was to reduce the dominance of the state in economic activities and assign the private sector a central role as the engine of growth. Option A: Foreign Direct Investment is a financial instrument to attract capital, not the overarching sector assigned the primary role. Option B: Information Technology is an industrial sector, not the primary economic actor empowered across the whole economy. Option D: Public Private Partnership is one specific delivery mechanism rather than the central driver of the overall LPG model.

124. Q124Planning, reform and the shape of policy

     A stable macroeconomic policy contributes to global integration through which of the following?

     • aBy efficiently coping with bio-waste
     • bBy using prices as signals
     • cBy higher returns from education policy
     • dBy creating financial disciplineAnswer
     ›Explanation

     Option D is correct because a stable macroeconomic policy maintains price stability, sustainable fiscal balances, and a predictable exchange rate, thereby creating financial discipline that attracts international investment and fosters global economic integration. Option A: Coping with bio-waste is an environmental management function rather than a macroeconomic policy instrument for global integration. Option B: Using prices as signals is a microeconomic market mechanism rather than a core macroeconomic stability policy. Option C: Higher returns from education policy pertain to human capital formation and social policy rather than macroeconomic stabilization.

125. Q125Planning, reform and the shape of policy

     Which of the following is one of the main elements for India's market-based development strategy?

     • aNon-intervention of the government
     • bInvesting in the form of capital
     • cIntegration with the global economyAnswer
     • dRapidly changing macroeconomic policy
     ›Explanation

     Option C is correct because integrating the domestic economy with the global economy through lower tariffs, trade liberalization, and opening up to foreign investment is a cornerstone of India's market-based development strategy. Option A: Non-intervention of the government is incorrect because India adopts a mixed economic framework where the state actively regulates and facilitates markets rather than practicing total non-intervention. Option B: Investing in the form of capital is a general requirement of any economic system and not specific to a market-based strategy. Option D: Rapidly changing macroeconomic policy is incorrect because economic development requires stable and predictable policy environments.

126. Q126Planning, reform and the shape of policy

     The major impact of Globalization on Indian Economy is:

     • aSteep rise in the export of textile goods
     • bStabilization in the Balance Payments
     • cSubstantial Increase in the Industrial Growth rate
     • dReduction in the Poverty but Increase in the economic disparitiesAnswer
     ›Explanation

     Option D is correct because empirical assessments of post-1991 globalization in India show that while absolute poverty headcounts declined significantly, income inequality and regional economic disparities widened considerably between urban and rural areas as well as across income groups. Option A: Growth occurred in textiles, but it faced stiff global competition after the Multi-Fibre Arrangement phase-out, making it an inadequate summary of major impact. Option B: The balance of payments improved initially due to capital inflows, but high trade deficits persisted, so it was not the sole major socioeconomic impact. Option C: Industrial sector growth remained moderate and erratic, never achieving sustained dominance over service sector growth.

127. Q127Planning, reform and the shape of policy

     The landmark programme launched by the Government of India to combat grave economic crisis of early 1990 decade was:

     • aPrivatisation of core sector industries
     • bMassive downsizing of Civil Servants
     • cStructural Adjustment ProgrammeAnswer
     • dConversion of Rupee for exchange purposes
     ›Explanation

     Option C is correct because the comprehensive package introduced by the Government of India in 1991 to combat the balance of payments and fiscal crisis was formally known as the Structural Adjustment Programme (SAP), supported by the IMF and World Bank. Option A: Privatisation was a component of the broader reforms, not the overarching title of the landmark programme. Option B: Massive downsizing of civil servants was not the core policy programme launched in 1991. Option D: Full rupee convertibility on the current account was implemented later in 1994 as a specific monetary measure, not the entire reform programme.

128. Q128Planning, reform and the shape of policy

     Which of the following can aid in furthering the Government's objective of inclusive growth? A. Promoting Self-Help Groups B. Promoting Micro, Small and Medium Enterprises C. Implementing the Right to Education Act Select the correct answer using the codes given below:

     • aA only
     • bA and B only
     • cB and C only
     • dA, B and CAnswer
     ›Explanation

     Option D is correct because inclusive growth seeks to ensure broad-based social and economic participation, which is directly advanced by empowering marginalized groups through microfinance in Self-Help Groups, generating decentralized employment through MSMEs, and securing universal foundational human capital through the Right to Education Act. Option A: Fails to recognize that supporting MSMEs and ensuring compulsory schooling through the RTE Act are vital pillars of inclusive growth. Option B: Excludes the Right to Education Act, which is essential for long-term equity and human development among disadvantaged populations. Option C: Leaves out the critical role played by Self-Help Groups in financial inclusion, women's empowerment, and poverty reduction.

129. Q129Population, poverty and work

     What is distinguished unemployment?

     • aOvermanned
     • bUnder employmentAnswer
     • cUneducated
     • dUnemployment without education
     ›Explanation

     Option B is correct because disguised unemployment is fundamentally a form of underemployment where workers are apparently occupied but work below their full productive capacity with zero marginal productivity. Option A: It is incorrect because overmanned simply describes an operational state of excess staffing rather than the conceptual economic classification. Option C: It is incorrect because lack of education describes illiteracy rather than a mode of labour underutilization. Option D: It is incorrect because unemployment without education refers to uneducated open unemployment.

130. Q130Population, poverty and work

     Providing every needy rural house hold at least 100 days of employment in a year is by the programme:

     • aMahatma Gandhi National Rural Employment Guarantee ProgrammeAnswer
     • bNational Rural Employment Programme
     • cPrime Minister's Rozgar Yojana
     • dFood for Work Programme
     ›Explanation

     Option A is correct because the Mahatma Gandhi National Rural Employment Guarantee Programme provides a statutory guarantee of at least 100 days of unskilled wage employment per year to every rural household. Option B: National Rural Employment Programme provided wage employment through asset creation but did not guarantee a specific 100-day legal entitlement per household. Option C: Prime Minister's Rozgar Yojana was a credit-linked self-employment scheme for educated unemployed youth, not a wage guarantee programme. Option D: Food for Work Programme aimed at providing supplementary foodgrains for labor during distress without a statutory guarantee of 100 days.

131. Q131Agriculture in the Indian economy

     In respect of which of the following crops the Green Revolution in India had limited impact?

     • aMaize
     • bWheat
     • cRice
     • dPulsesAnswer
     ›Explanation

     Option D is correct because the Green Revolution was heavily skewed toward cereals, leaving pulses largely untouched due to lack of high-yielding drought-resistant seeds and shifting of fertile land to wheat and rice. Option A: Maize benefited from high-yielding hybrid varieties and modernized inputs. Option B: Wheat was the primary beneficiary and experienced the most dramatic yield and production increases. Option C: Rice experienced widespread expansion and productivity growth under the high-yielding variety program.

132. Q132Agriculture in the Indian economy

     Land Development Banks are associated with which of the following?

     • aCommercial Bank
     • bIndustrial Development Bank of India
     • cFood Corporation of India
     • dCooperative Credit SystemAnswer
     ›Explanation

     Option D is correct because Land Development Banks, now known as State Cooperative Agriculture and Rural Development Banks, constitute the long-term segment of the rural cooperative credit system. Option A: Commercial banks belong to the scheduled commercial banking sector and are not part of the cooperative land development structure. Option B: Industrial Development Bank of India was set up to provide credit and financing facilities to industrial enterprises. Option C: Food Corporation of India is a public procurement and logistics agency, not a credit-providing bank.

133. Q133Agriculture in the Indian economy

     Duration of medium-term agricultural loan:

     • aFrom 15 months to 5 yearsAnswer
     • bFrom 5 years to 10 years
     • cLess than 3 months
     • dFrom 3 to 6 months
     ›Explanation

     Option A is correct because in agricultural finance classification, medium-term loans are those granted for repayment periods ranging from 15 months up to 5 years. Short-term agricultural loan: up to 15 months Medium-term agricultural loan: 15 months to 5 years Long-term agricultural loan: beyond 5 years Option B: Loans for durations of 5 to 10 years are classified as long-term loans. Option C: Loans of less than 3 months represent very short-term seasonal credit rather than medium-term credit. Option D: Loans of 3 to 6 months fall strictly within the short-term seasonal crop loan bracket.

134. Q134Agriculture in the Indian economy

     The body that recommends the Minimum Support Price for food crops to the Central Government:

     • aAgricultural Association
     • bMinistry of Agriculture
     • cCommission for Agricultural Costs and PricesAnswer
     • dFood Corporation of India
     ›Explanation

     Option C is correct because the Commission for Agricultural Costs and Prices (CACP) is the expert statutory body mandated to submit price policy reports recommending Minimum Support Prices (MSP) to the Central Government. Commission for Agricultural Costs and Prices (CACP): Recommends MSP Cabinet Committee on Economic Affairs (CCEA): Approves MSP Food Corporation of India (FCI): Implements procurement Option A: Incorrect because it is a generic term and not an official government body responsible for MSP policy. Option B: Incorrect because the Ministry of Agriculture considers the recommendations of CACP and passes them to CCEA for final approval, rather than recommending them as an advisory body. Option D: Incorrect because the Food Corporation of India is the central agency responsible for procurement, storage, and distribution, not policy recommendations.

135. Q135Industry in the Indian economy

     Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs)? A. The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt. B. The government no longer intends to retain the management control of the CPSEs. Which of the statements given above is/are correct?

     • aA only
     • bB only
     • cBoth A and B
     • dNeither A nor BAnswer
     ›Explanation

     Option D is correct because disinvestment proceeds are mainly used to finance social infrastructure, capital expenditure, and schemes like the National Investment Fund, rather than primarily paying back external debt, and the government generally retains majority equity and management control except in specific strategic sales. Option A: It is incorrect because the primary objective is not servicing external debt but financing development expenditures and capital investments. Option B: It is incorrect because disinvestment does not imply complete withdrawal of management control; the government retains at least 51% stake in most CPSEs. Option C: It is incorrect because both underlying statements are factually incorrect regarding the official objectives of CPSE disinvestment.

136. Q136Industry in the Indian economy

     The SEZ Act, 2005 which came into effect in February 2006 has certain objectives. In this context, consider the following: A. Development of infrastructure facilities B. Promotion of investment from foreign sources. C. Promotion of exports of services only. Which of the above are the objectives of this Act?

     • aA and B onlyAnswer
     • bC only
     • cB and C only
     • dA, B and C
     ›Explanation

     Option A is correct because the SEZ Act of 2005 aims to promote the export of both goods and services, which makes statement C incorrect while statements A and B are valid objectives. Generation of additional economic activity Promotion of exports of goods and services Promotion of investment from domestic and foreign sources Creation of employment opportunities Development of infrastructure facilities Option B: Statement C is incorrect because the Act targets goods alongside services rather than services exclusively. Option C: It includes statement C, which falsely restricts the scope of export promotion to services only. Option D: It includes statement C, overlooking the fact that export of goods is a major mandate of SEZs.

137. Q137Money, banking and financial markets

     High-powered money can also be called by which of the following.

     • aM₁Answer
     • bM₂
     • cM₃
     • dM₄

     Explanation coming soon.

138. Q138Money, banking and financial markets

     High powered money is also known as:

     • aM₁
     • bM₂Answer
     • cM₃
     • dM₄

     Explanation coming soon.

139. Q139Money, banking and financial markets

     Which of the following is not included in the qualitative credit control of the Reserve Bank?

     • aMoral suasion
     • bChange in margin requirement
     • cDifferential interest margin
     • dBank rate policyAnswer
     ›Explanation

     Option D is correct because the bank rate policy is a quantitative or general credit control measure that affects the overall cost and quantity of credit across the whole economy, rather than a selective or qualitative tool. Option A: Moral suasion is incorrect because it is a qualitative tool using advice and persuasion to influence bank lending. Option B: Change in margin requirement is incorrect because it is a qualitative tool used to regulate the flow of credit to specific security-backed loans. Option C: Differential interest margin is incorrect because it is a qualitative tool that prescribes varied interest rates for specific sectors.

140. Q140Money, banking and financial markets

     Qualitative credit control of Reserve Bank of India does not includes this:

     • aMoral Suasion
     • bChange in Margin requirement
     • cDifferential Interest rate
     • dBank Rate PolicyAnswer
     ›Explanation

     Option D is correct because the Bank Rate Policy is a quantitative or general credit control tool that regulates the total volume and cost of bank credit in the economy, rather than its direction. Quantitative credit control tools: Bank Rate, Cash Reserve Ratio, Statutory Liquidity Ratio, Open Market Operations, Repo and Reverse Repo Rates. Qualitative credit control tools: Margin requirements, Moral suasion, Regulation of consumer credit, Rationing of credit, Differential interest rates. Option A: Moral Suasion is a qualitative tool involving central bank guidance and persuasion rather than quantitative regulation. Option B: Change in Margin requirement is a qualitative tool used to restrict or encourage borrowing against specific securities. Option C: Differential Interest rate is a qualitative tool designed to provide cheaper credit to prioritized or vulnerable sectors.

141. Q141Money, banking and financial markets

     The date on which 14 banks were nationalized in India:

     • a1 March 1967
     • b10 April, 1968
     • c19 July, 1969Answer
     • d20 April, 1970.
     ›Explanation

     Option C is correct because Prime Minister Indira Gandhi announced the nationalisation of 14 major commercial banks through an ordinance on 19 July, 1969. First phase nationalisation: 19 July 1969 (14 banks with deposits exceeding 50 crore rupees) Second phase nationalisation: 15 April 1980 (6 banks with deposits exceeding 200 crore rupees) Option A: 1 March 1967 is incorrect because no bank nationalisation occurred on this date. Option B: 10 April, 1968 is incorrect because social control over banks, not nationalisation, was introduced during 1968. Option D: 20 April, 1970 is incorrect because nationalisation had already taken place the previous year.

142. Q142Money, banking and financial markets

     Regional Rural Bank is accountable to:

     • aReserve Bank of India
     • bMinistry of Finance
     • cNABARDAnswer
     • dScheduled Commercial Bank
     ›Explanation

     Option C is correct because the National Bank for Agriculture and Rural Development (NABARD) is statutorily tasked with supervising, monitoring, and conducting statutory inspections of Regional Rural Banks under the Banking Regulation Act, 1949. Option A: Reserve Bank of India is the central monetary authority that lays down overarching banking policies, but direct supervisory oversight and accountability of RRBs lies with NABARD. Option B: Ministry of Finance holds ownership stakes and policy direction, but operational regulatory supervision is carried out by NABARD. Option D: Scheduled Commercial Bank acts as the sponsor bank providing managerial and operational assistance, not the statutory supervisory authority.

143. Q143Money, banking and financial markets

     Land Development Banks form a part of the:

     • aCommercial Bank
     • bIndustrial Development Bank
     • cFood Corporation of India
     • dCooperative Credit StructureAnswer
     ›Explanation

     Option D is correct because Land Development Banks, now known as State Cooperative Agriculture and Rural Development Banks, form an integral part of the long-term cooperative credit structure in India. Option A: Commercial banks provide short-to-medium-term commercial credit and function separately from the cooperative credit system. Option B: Industrial Development Bank focuses on long-term project finance for industries rather than agricultural land mortgage lending. Option C: Food Corporation of India is a statutory body responsible for procurement, storage, and distribution of food grains, not a credit institution.

144. Q144Money, banking and financial markets

     With reference to the Non-banking Financial Companies (NBFCs) in India, consider the following statements: A. They cannot engage in the acquisition of securities issued by the government. B. They cannot accept demand deposits like Savings Account. Which of the statements given above is/are correct?

     • aA only
     • bB onlyAnswer
     • cBoth A and B
     • dNeither A nor B
     ›Explanation

     Option B is correct because Non-banking Financial Companies are legally prohibited from accepting demand deposits, while they are permitted to invest in and acquire government securities as part of their ordinary business and statutory requirements. Option A: A only is incorrect because statement A is false; NBFCs are actively permitted to acquire securities issued by the government. Option C: Both A and B is incorrect because statement A is inaccurate. Option D: Neither A nor B is incorrect because statement B is an accurate statutory restriction on NBFC activities under RBI regulations.

145. Q145Money, banking and financial markets

     Which one of the following statements is an appropriate description of deflation ?

     • aIt is a sudden fall in the value of a currency against other currencies
     • bIt is a persistent recession in both the financial and real sectors of economy
     • cIt is a persistent fall in the general price level of goods and servicesAnswer
     • dIt is a fall in the rate of inflation over a period of time
     ›Explanation

     Option C is correct because deflation is defined in macroeconomic terms as a sustained and persistent decline in the general price level of goods and services over time. Option A: A sharp decline in the external value of a domestic currency against foreign currencies is termed currency depreciation or devaluation. Option B: A persistent downturn across financial and productive sectors represents an economic depression or prolonged recession, not deflation. Option D: A slowdown in the rate of price increases while prices continue to rise is termed disinflation, not deflation.

146. Q146Money, banking and financial markets

     Regarding the Indian stock market, which conducts the highest number of transactions?

     • aReserve Bank of India
     • bBombay Stock Exchange
     • cNational Stock ExchangeAnswer
     • dInternational Stock Exchange
     ›Explanation

     Option C is correct because the National Stock Exchange is India's largest stock exchange by market capitalization and turnover, executing the highest daily trading volume and number of transactions across equity and derivative segments. Option A: The Reserve Bank of India is a central bank and regulatory institution, not a stock exchange. Option B: Bombay Stock Exchange is the oldest exchange in Asia, but its transaction volume and turnover are lower than the National Stock Exchange. Option D: International Stock Exchange is not the domestic platform handling mainstream trading volume in the Indian stock market.

147. Q147The named institutions: public sector undertakings, banks and their brands

     The following Emblem Indicates:

     • aDoordarshan
     • bBharat Sanchar Nigam LimitedAnswer
     • cBharat Electronics Limited
     • dSteel Authority of India Limited

     Explanation coming soon.

148. Q148The named institutions: public sector undertakings, banks and their brands

     The following emblem belongs to:

     • aBank of India
     • bCanara Bank
     • cState Bank of IndiaAnswer
     • dIndian Bank

     Explanation coming soon.

149. Q149The named institutions: public sector undertakings, banks and their brands

     The motto of Bank of India:

     • aWith Press of Trust
     • bCare at Every Step of Life
     • cThe Growing StoreAnswer
     • dLooking Forward to Tomorrow

     Explanation coming soon.

150. Q150The named institutions: public sector undertakings, banks and their brands

     The motto of State Bank of India:

     • aWith You All The WayAnswer
     • bA Tradition of Trust
     • cTrusted Family Bank
     • dCare at Every Stage of Life
     ›Explanation

     Option A is correct because 'With You All The Way' is the official motto and core tagline used by State Bank of India to express its comprehensive customer service. Option B: A Tradition of Trust was the official motto of the erstwhile Allahabad Bank. Option C: Trusted Family Bank was the motto of Dena Bank before its amalgamation into Bank of Baroda. Option D: Care at Every Stage of Life is a slogan used in the healthcare sector, not by State Bank of India.

151. Q151The named institutions: public sector undertakings, banks and their brands

     To which of the following does this symbol belong?

     
     • aBank of India Bank
     • bCanara Bank
     • cState Bank of IndiaAnswer
     • dIndian Bank

     Explanation coming soon.

152. Q152The named institutions: public sector undertakings, banks and their brands

     The slogan of State Bank of India is :

     • aWith you all the wayAnswer
     • bA tradition of trust
     • cTrusted family Bank
     • dCare at every stage of life
     ›Explanation

     Option A is correct because "With you all the way" (along with "The banker to every Indian") is an official slogan of the State Bank of India. Option B: "A tradition of trust" is the slogan of Allahabad Bank (now merged with Indian Bank). Option C: "A trusted family bank" or similar slogans are associated with other commercial banks, such as Dena Bank's "Trusted Family Bank". Option D: "Care at every stage of life" is not a recognized slogan of the State Bank of India.

153. Q153The named institutions: public sector undertakings, banks and their brands

     The previous name of Axis Bank

     • aU.T.I. BankAnswer
     • bBombay Stock Exchange
     • cICICI Bank
     • dReliance Bank
     ›Explanation

     Option A is correct because Axis Bank was originally incorporated in 1993 as UTI Bank and was later rebranded as Axis Bank in 2007 to build an independent corporate identity. Option B: Bombay Stock Exchange is Asia's oldest stock exchange, not a former name of a commercial bank. Option C: ICICI Bank is a completely separate private banking corporation that developed from the erstwhile ICICI parent institution. Option D: Reliance Bank is a retail bank in the United Kingdom operated by The Salvation Army, unrelated to Axis Bank.

154. Q154Public finance and the budget

     According to the concept of 'VAT', which of the following descriptions does not clarify?

     • aIt reduces economic output
     • bIt is an era of generally taxing simple people
     • cIts effect is like a cascade effectAnswer
     • dIt is a self-implementing system
     ›Explanation

     Option C is correct because VAT is explicitly designed to eliminate the cascading effect (tax on tax) by providing input tax credits, so stating that its effect is like a cascading effect is fundamentally incorrect and does not describe VAT. Option A: It is framed as an incorrect description because VAT aims to avoid distorting economic choices and production efficiency. Option B: It is considered a broad general indirect consumption tax applied down to common retail consumers. Option D: It acts as a self-enforcing, self-implementing mechanism because buyers demand tax invoices to claim input tax credits.

155. Q155Public finance and the budget

     Which of the following measures in India would hinder good fiscal governance?

     • aIncreasing the debt-GDP ratioAnswer
     • bIncreasing the combined tax-GDP ratio
     • cReducing the fiscal deficit to zero
     • dReducing the proportion of interest payments relative to revenue receipts
     ›Explanation

     Option A is correct because an increasing debt-to-GDP ratio indicates that a nation's public debt is accumulating faster than its economic output, which increases interest obligations, crowds out private investment, and severely weakens fiscal stability. Option B: Increasing the tax-to-GDP ratio enhances the government's revenue capacity without excessive borrowing, supporting fiscal health. Option C: Reducing the fiscal deficit to zero reflects strict fiscal discipline and curtails sovereign debt growth. Option D: Reducing interest payments relative to revenue receipts leaves more fiscal space for productive development and capital expenditure.

156. Q156Public finance and the budget

     Deficit financing:

     • aAffects the mobilization of aggregate resources
     • bIs the source of money supply deficit
     • cIs deflationary in nature
     • dIs inflationary in nature.Answer
     ›Explanation

     Option D is correct because deficit financing adds purchasing power to the economy and expands the money supply without an immediate matching increase in the output of goods and services, leading to inflationary pressures. Option A: Deficit financing is a direct mechanism for mobilizing aggregate resources rather than hindering their mobilization. Option B: Deficit financing creates an increase in the money supply, not a deficit or shrinkage of money supply. Option C: Deficit financing exerts upward pressure on aggregate demand and prices, making it inflationary rather than deflationary.

157. Q157Public finance and the budget

     Which of the following measures shall hamper a good fiscal administration in India?

     • aIncreasing the debt GDP ratioAnswer
     • bImproving the combined tax GDP ratio
     • cBringing down Revenue- deficit to Zero
     • dInterest Payment relative to revenue receipts being brought down
     ›Explanation

     Option A is correct because an increasing debt-to-GDP ratio indicates an unsustainable accumulation of sovereign debt, raising future debt servicing burdens and undermining macroeconomic stability. Option B: Improving the combined tax-to-GDP ratio strengthens public revenues and fiscal health rather than hampering administration. Option C: Bringing down the revenue deficit to zero is a core objective of prudent fiscal administration, as envisioned under the FRBM framework. Option D: Reducing interest payments relative to revenue receipts frees up budgetary resources for capital formation and social development.

158. Q158Public finance and the budget

     Which one of the following was not stipulated in the Fiscal Responsibility and Budget Management Act, 2003 ?

     • aElimination of revenue deficit by the end of the fiscal year 2007-08
     • bNon-borrowing by the central government from Reserve Bank of India except under certain circumstances
     • cElimination of primary deficit by the end of the fiscal year 2008-09Answer
     • dFixing government guarantees in any financial year as a percentage of GDP
     ›Explanation

     Option C is correct because the FRBM Act of 2003 did not mandate the elimination of the primary deficit; it mandated the elimination of the revenue deficit and containment of the fiscal deficit. Option A: The elimination of the revenue deficit by 2007-08 was an explicit statutory target of the original 2003 Act. Option B: Prohibiting direct central government borrowing from the RBI via primary market issuances was an integral reform under the Act. Option D: Setting caps on sovereign guarantees as a proportion of GDP was a binding rule under the FRBM framework.

159. Q159Public finance and the budget

     In which year zero based budget was introduced first time in India

     • a1986-87Answer
     • b1975-76
     • c1983
     • d1990
     ›Explanation

     Option A is correct because Zero-Based Budgeting was formally introduced across Union government departments in India in the budget for the financial year 1986-87 under Finance Minister V. P. Singh. Concept developed by Peter Pyhrr: 1970 Experimental trial in Department of Science and Technology: 1983 Formal adoption across Union Budget: 1986-87 Option B: 1975-76 is incorrect because the technique had not yet been adopted in Indian budgetary practice. Option C: 1983 was limited to an experimental adoption within the Department of Science and Technology, not its formal budget-wide introduction. Option D: 1990 is incorrect because the system was implemented in the mid-1980s.

160. Q160Public finance and the budget

     What is the ratio of expenditure between the Central and State Governments for the 'Sakshar Bharat' scheme, launched on September 8, 2009?

     • a25:75 percent
     • b50:50 percent
     • c75:25 percentAnswer
     • d90:10 percent
     ›Explanation

     Option C is correct because the Saakshar Bharat Mission was implemented with a funding pattern of 75:25 between the Central Government and State Governments, with 90:10 reserved only for the Northeastern States. Option A: Incorrect because 25:75 reverses the funding shares, attributing an unrealistically low share to the Centre. Option B: Incorrect because a 50:50 equal sharing ratio was not adopted for this flagship literacy scheme. Option D: Incorrect because the 90:10 ratio was restricted specifically to the Northeastern States and not applicable generally.