introduction to indian economy section 14 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

In 1991, India faced a serious balance of payment crisis and was forced to sharply devalue its currency.

The country was in the grip of high inflation, low growth and the foreign reserves were not even worth meeting three weeks of imports. Under these situations, the currency was devalued to 17.90 against the dollar.

Answer: (c)

By merging the two erstwhile wage employment programme -

1. National Rural Employment Programme (NREP),
2. Rural Landless Employment Guarantee Programme (RLEGP), and
3. Jawahar Rozgar Yojana (JRY) was started with effect from April 1, 1989, on an 80:20 cost-sharing basis between the centre and the States.

The main objective of the Yojana was additional gainful employment for the unemployed and under-employed persons in rural areas.

The other objective was the creation of sustained employment by strengthening rural economic infrastructure and assets in favour of rural poor for their direct and continuing benefits.

Answer: (a)

Between 1951 and 2000 the share of agriculture in GDP fell from around 59% to around 25%.

The share of the services sector in GDP was more than the industrial sector. Between 1951 and 2000 it was around 28% for services and 13 % for manufacturing in 1950.

In 1990 it was around 40 % services and 24 % manufacturing. It was around 51 % services in 2000.

Answer: (b)

Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. In zero-based budgeting, every line item of the budget must be approved, rather than only changes. During the review process, no reference is made to the previous level of expenditure.

Regarding Zero Base Budgeting (ZBB) Existing Government programmes can be discarded under ZBB if they are found to be outdated.

Moreover, ZBB is difficult to be applied to Human Development programmes as the outcome of such programmes is intangible in nature.

Answer: (d)

Austerity describes policies used by governments to reduce budget deficits during adverse economic conditions. These policies may include spending cuts, tax increases.

This is done in an economic crisis situation to improve the credit rating of the countries going through adverse economic conditions.