introduction to indian economy section 5 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

The shareable central taxes include corporation tax, income tax, wealth tax, customs, excise duty and service tax. The taxes, which are not shared with states include some cesses like education and road.

Income Tax in India includes all income except the agricultural income that is levied and collected by the central government.

Answer: (c)

Domestic saving primarily consists of three components, viz., household sector saving, private corporate sector saving and public sector saving. Household sector saving constitutes the largest portion of gross domestic saving. Household sector saving comprises saving in financial assets and saving in physical assets.

Household saving in financial assets (net) is estimated as gross financial assets net of financial liabilities, while household saving in physical assets is the net addition to physical assets by the households.

Gross financial savings of the household sector includes the saving in the form of currency, bank deposits, non-bank deposits, saving in life insurance fund, saving in provident and pension fund, claims on government, shares and debentures inclusive of investment in mutual funds and net trade.

Answer: (a)

Household savings contribute 60-80% of India’s gross domestic savings and have been its most stable and highest component for over six decades. A tenth of total assets are in currency; a similar amount goes to the government through small savings schemes.

Since there is no social security in India, life insurance and provident funds tend to be allocated significant amounts from total household savings.

Finally, capital market instruments- such as shares, debentures, mutual funds get less than 5% of total investment.

Answer: (d)

The national income of a country can be measured by three alternative methods:

1. Product Method: measures national income as a flow of goods and services
2. Income Method: measures national income as a flow of factor incomes and
3. Expenditure Method: measures national income as a flow of expenditure.

Answer: (a)

The National Development Council (NDC) or the Rashtriya Vikas Parishad is the apex body for decision making and deliberations on development matters in India, presided over by the Prime Minister.

It was set up on August 6, 1952, to strengthen and mobilize the effort and resources of the nation in support of the Plan, to promote common economic policies in all vital spheres, and to ensure the balanced and rapid development of all parts of the country.

The Council comprises the Prime Minister, the Union Cabinet Ministers, Chief Ministers of all States or their substitutes, representatives of the union territories and the members of the Commissions. It is an extraconstitutional and non-statutory body. Its status is advisory to the planning commission but not binding.