MCQ on New Economic Policy
Q1. Which year marked the beginning of the New Economic Policy in India?
a) 1981
b) 1991
c) 2001
d) 2011
Show Answer
Correct Answer: b) 1991
Explanation: The New Economic Policy was introduced in India in 1991 under the leadership of P.V. Narasimha Rao. The policy aimed to liberalize the Indian economy, promote foreign investment, and encourage private sector participation.
Correct Answer: b) 1991
Explanation: The New Economic Policy was introduced in India in 1991 under the leadership of P.V. Narasimha Rao. The policy aimed to liberalize the Indian economy, promote foreign investment, and encourage private sector participation.
Show Answer
Correct Answer: d) All of the above
Explanation: The primary objectives of the New Economic Policy in India include promoting exports, reducing trade deficit, and encouraging import substitution. The policy aimed to boost the country’s foreign exchange earnings, promote economic growth, and enhance self-reliance.
Q3. Which of the following is a major component of the New Economic Policy in India?
a) Liberalization
b) Privatization
c) Globalization
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The New Economic Policy in India consists of three major components: Liberalization, Privatization, and Globalization. These components aimed to reduce government intervention in the economy, promote private sector participation, and integrate the Indian economy with the global market.
Q4. Which of the following sectors was most affected by the New Economic Policy in India?
a) Agriculture
b) Industry
c) Services
d) Mining
Show Answer
Correct Answer: b) Industry
Explanation: The industry sector was most affected by the New Economic Policy in India. The policy aimed to liberalize the industrial sector by removing barriers to entry, promoting competition, and encouraging private sector.
Q5. Which of the following reforms was introduced under the New Economic Policy to promote foreign investment in India?
a) Abolition of industrial licensing
b) Reduction of import tariffs
c) Introduction of the Foreign Direct Investment (FDI) policy
d) Devaluation of the Indian Rupee
Show Answer
Correct Answer: c) Introduction of the Foreign Direct Investment (FDI) policy
Explanation: The introduction of the Foreign Direct Investment (FDI) policy was a key reform under the New Economic Policy to promote foreign investment in India. The policy aimed to attract foreign capital by allowing foreign companies to invest in various sectors of the Indian economy, subject to certain conditions and limits.
Q6. Which of the following reforms was introduced under the New Economic Policy to promote competition in the Indian economy?
a) Abolition of industrial licensing
b) Reduction of import tariffs
c) Introduction of the Foreign Direct Investment (FDI) policy
d) Devaluation of the Indian Rupee
Show Answer
Correct Answer: a) Abolition of industrial licensing
Explanation: The abolition of industrial licensing was a key reform introduced under the New Economic Policy to promote competition in the Indian economy. This reform aimed to reduce government intervention in the industrial sector and allow private companies to enter and compete freely, leading to increased efficiency and productivity.
Q7. Which of the following reforms was introduced under the New Economic Policy to promote export-oriented industries in India?
a) Abolition of industrial licensing
b) Reduction of import tariffs
c) Introduction of the Foreign Direct Investment (FDI) policy
d) Devaluation of the Indian Rupee
Show Answer
Correct Answer: d) Devaluation of the Indian Rupee
Explanation: The devaluation of the Indian Rupee was a key reform introduced under the New Economic Policy to promote export-oriented industries in India. By devaluing the currency, Indian exports became more competitive in the global market, leading to increased demand for Indian goods and services.
Q8. Which of the following reforms was introduced under the New Economic Policy to reduce the fiscal deficit in India?
a) Reduction of government subsidies
b) Privatization of public sector enterprises
c) Introduction of the Value Added Tax (VAT)
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The New Economic Policy introduced several reforms to reduce the fiscal deficit in India, including the reduction of government subsidies, privatization of public sector enterprises, and the introduction of the Value Added Tax (VAT). These measures aimed to improve the government’s fiscal position by reducing expenditure and increasing revenue.
Q9. Which of the following is a major outcome of the New Economic Policy in India?
a) Increased foreign investment
b) Increased private sector participation
c) Increased integration with the global economy
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The New Economic Policy in India has led to several major outcomes, including increased foreign investment, increased private sector participation, and increased integration with the global economy. These outcomes have contributed to the overall growth and development of the Indian economy.
Q10. Which of the following is a major challenge faced by the Indian economy in the post-New Economic Policy era?
a) Inequality
b) Unemployment
c) Environmental degradation
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The Indian economy has faced several major challenges in the post-New Economic Policy era, including inequality, unemployment, and environmental degradation. While the policy has led to significant economic growth, it has also raised concerns about the distribution of benefits, job creation, and the impact on the environment.
Q11. Which of the following sectors was opened up for private sector participation under the New Economic Policy in India?
a) Telecommunications
b) Banking
c) Insurance
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The New Economic Policy in India opened up several sectors for private sector participation, including telecommunications, banking, and insurance. This aimed to promote competition, improve efficiency, and enhance the overall performance of these sectors.
Q12. Which of the following reforms was introduced under the New Economic Policy to promote financial sector liberalization in India?
a) Deregulation of interest rates
b) Establishment of private sector banks
c) Introduction of the Securities and Exchange Board of India (SEBI)
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The New Economic Policy introduced several reforms to promote financial sector liberalization in India, including the deregulation of interest rates, the establishment of private sector banks, and the introduction of the Securities and Exchange Board of India (SEBI). These reforms aimed to improve the efficiency and stability of the financial sector.
Q13. Which of the following is a major outcome of the financial sector liberalization under the New Economic Policy in India?
a) Increased access to credit
b) Increased competition in the banking sector
c) Improved efficiency of the financial sector
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The financial sector liberalization under the New Economic Policy in India has led to several major outcomes, including increased access to credit, increased competition in the banking sector, and improved efficiency of the financial sector. These outcomes have contributed to the overall growth and development of the Indian economy.
Q14. Which of the following is a major challenge faced by the Indian economy in the post-New Economic Policy era in terms of financial sector stability?
a) High levels of non-performing assets (NPAs)
b) High levels of public debt
c) High levels of fiscal deficit
d) All of the above
Show Answer
Correct Answer: a) High levels of non-performing assets (NPAs)
Explanation: A major challenge faced by the Indian economy in the post-New Economic Policy era in terms of financial sector stability is the high levels of non-performing assets (NPAs) in the banking sector. High NPAs can affect the stability of the financial sector and hamper the flow of credit to the economy.
Q15. Which of the following is a major outcome of the trade liberalization under the New Economic Policy in India?
a) Increased exports
b) Increased imports
c) Increased trade deficit
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: The trade liberalization under the New Economic Policy in India has led to several major outcomes, including increased exports, increased imports, and an increased trade deficit. While the policy has contributed to the overall growth and development of the Indian economy, it has also raised concerns about the sustainability of the trade deficit.
Q16. Which of the following is a major challenge faced by the Indian economy in the post-New Economic Policy era in terms of trade competitiveness?
a) High levels of export growth
b) Low levels of export growth
c) High levels of import growth
d) Low levels of import growth
Show Answer
Correct Answer: b) Low levels of export growth
Explanation: A major challenge faced by the Indian economy in the post-New Economic Policy era in terms of trade competitiveness is low levels of export growth. Factors such as infrastructural bottlenecks, high transaction costs, and an unfavorable exchange rate can hamper the growth of exports and affect the country’s overall trade balance.
Q17. Which of the following is a major challenge faced by the Indian economy in the post-New Economic Policy era in terms of import dependence?
a) High import dependence
b) Low import dependence
c) High export dependence
d) Low export dependence
Show Answer
Correct Answer: a) High import dependence
Explanation: A major challenge faced by the Indian economy in the post-New Economic Policy era in terms of import dependence is high import dependence. The country relies heavily on imports of essential items such as crude oil, electronic goods, and machinery, which can expose the economy to external shocks and affect its macroeconomic stability.
Q18. Which of the following is a major government initiative aimed at promoting trade facilitation in India?
a) Electronic National Agriculture Market (e-NAM)
b) Integrated Goods and Services Tax (IGST)
c) Single Window Interface for Facilitating Trade (SWIFT)
d) National Skill Development Mission (NSDM)
Show Answer
Correct Answer: c) Single Window Interface for Facilitating Trade (SWIFT)
Explanation: The Single Window Interface for Facilitating Trade (SWIFT) is a major government initiative aimed at promoting trade facilitation in India. The platform aims to simplify and streamline the customs clearance process by providing a single interface for the submission of documents and obtaining necessary approvals from various government agencies.
Q19. Which of the following is a major challenge faced by the Indian economy in the post-New Economic Policy era in terms of trade diversification?
a) High trade diversification
b) Low trade diversification
c) High trade concentration
d) Low trade concentration
Show Answer
Correct Answer: b) Low trade diversification
Explanation: A major challenge faced by the Indian economy in the post-New Economic Policy era in terms of trade diversification is low trade diversification. The country’s exports and imports are concentrated in a few products and markets, which can expose the economy to external shocks and limit its ability to benefit from global trade opportunities.
Q20. Which of the following is a major government initiative aimed at promoting export-oriented industries in India?
a) Special Economic Zones (SEZs)
b) Export Promotion Councils (EPCs)
c) Export-Import Bank of India (EXIM Bank)
d) All of the above
Show Answer
Correct Answer: d) All of the above
Explanation: Special Economic Zones (SEZs), Export Promotion Councils (EPCs), and the Export-Import Bank of India (EXIM Bank) are all major government initiatives aimed at promoting export-oriented industries in India. SEZs provide a conducive environment for export-oriented industries, EPCs facilitate export promotion activities, and the EXIM Bank provides financial assistance to exporters.