UPSC Prelims 2014
Indian Economy Previous Year Questions (PYQs)
Explore 14 solved UPSC Prelims 2014 Indian Economy questions with detailed step-by-step bilingual solutions, option analysis, and answer keys.
Consider the following statements:
- Maize can be used for the production of starch.
- Oil extracted from maize can be a feedstock for biodiesel.
- Alcoholic beverages can be produced by using maize.
Which of the statements given above is/are correct?
Detailed Explanation:
✅ Statement 1 – Correct: Maize (corn) is a major source of cornstarch, widely used as a thickening agent in food products, bioplastics, and pharmaceutical industries.
✅ Statement 2 – Correct: Corn oil extracted from maize germ serves as an effective feedstock for biodiesel production, offering a renewable fuel alternative.
✅ Statement 3 – Correct: Maize is fermented to produce alcoholic beverages including bourbon whiskey, corn beer, and ethanol for fuel and drinks.
Programme/ Project Ministry
- Drought-Prone Area Programme: Ministry of Agriculture
- Desert Development Programme: Ministry of Environment and Forests
- National Watershed Development Project for Rainfed Areas: Ministry of Rural Development
Which of the above pairs are correctly matched?
Detailed Explanation:
❌ Pair 1 – Incorrect: Drought Prone Area Programme (DPAP) is implemented by Ministry of Rural Development, not Ministry of Agriculture. It aims to mitigate adverse effects of drought on production of crops and livestock and productivity of land, water and human resources.
❌ Pair 2 – Incorrect: Desert Development Programme (DDP) is implemented by Ministry of Rural Development, not Ministry of Environment and Forests. It aims to control desertification and restore ecological balance in desert areas.
❌ Pair 3 – Incorrect: National Watershed Development Project for Rainfed Areas (NWDPRA) is implemented by Ministry of Agriculture (now under Pradhan Mantri Krishi Sinchayee Yojana), not Ministry of Rural Development.
The main objective of the 12th Five-Year Plan is
Detailed Explanation:
The 12th Five-Year Plan (2012-2017) had the theme "Faster, Sustainable and More Inclusive Growth".
It aimed for 8% GDP growth, 4% growth in agriculture, 10% growth in manufacturing, and focused on reducing regional disparities and poverty through inclusive development.
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In India, cluster bean (Guar) is traditionally used as a vegetable or animal feed, but recently the cultivation of this has assumed significance. Which one of the following statements is correct in this context?
Detailed Explanation:
✅ Statement 2 – Correct: Guar gum, extracted from the endosperm of guar seeds, is used as a thickening and gelling agent in hydraulic fracturing (fracking) for shale gas extraction. Its viscosifying properties help carry proppants into fractures.
❌ Statement 1 – Incorrect: Guar seed oil is not used in biodegradable plastics manufacture; guar gum finds industrial applications but not in this domain.
❌ Statement 3 – Incorrect: Guar leaves do not possess antihistamine properties; they are primarily used as animal feed and vegetables.
❌ Statement 4 – Incorrect: Guar is not a source of biodiesel; its primary economic value lies in guar gum production, not oil extraction for fuel.
Which of the following are associated with ‘Planning’ in India?
- The Finance Commission
- The National Development Council
- The Union Ministry of Rural Development
- The Union Ministry of Urban Development
- The Parliament
Select the correct answer using the code given below.
Detailed Explanation:
✅ Statement 2 – Correct: The National Development Council (NDC) was the apex body for approving and reviewing Five-Year Plans in India, directly associated with national planning.
✅ Statement 5 – Correct: Parliament has constitutional authority to approve Five-Year Plans and budgetary allocations for planned development.
❌ Statement 1 – Incorrect: The Finance Commission deals with tax devolution and grants-in-aid between Centre and States, not with formulating development plans.
❌ Statement 3 – Incorrect: The Union Ministry of Rural Development implements sectoral schemes like MGNREGA and PMAY-G, not overall national planning.
❌ Statement 4 – Incorrect: The Union Ministry of Urban Development (now Ministry of Housing and Urban Affairs) executes urban-specific programs, not macro-level planning.
With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?
- Defence expenditure
- Interest payments
- Salaries and pensions
- Subsidies
Select the correct answer using the code given below.
Detailed Explanation:
All four items listed were covered under Non-Plan Expenditure before the classification was abolished in 2017-18.
Non-Plan Expenditure included: Defence expenditure (capital), Interest payments (revenue), Salaries and pensions (revenue), and Subsidies (revenue). These were committed/obligatory expenditures not routed through Planning Commission.
In the context of Indian economy which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
- To enable the Central Bank to control the amount of advances the banks can create
- To make the people’s deposits with banks safe and liquid
- To prevent commercial banks from making excessive profits
- To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
Detailed Explanation:
✅ Statement 1 – Correct: Statutory Reserve Requirements (CRR and SLR) are the primary quantitative tools used by the RBI to control the credit-creation capacity and advances that commercial banks can make, thereby regulating money supply in the economy.
❌ Statement 2 – Incorrect: While reserves help liquidity management, the safety of deposits is ensured by DICGC (Deposit Insurance and Credit Guarantee Corporation) and Basel norms (Capital Adequacy Requirements), not by statutory reserves as a primary purpose.
❌ Statement 3 – Incorrect: Statutory reserves are monetary policy instruments designed to control liquidity and credit, not to regulate or prevent bank profits.
❌ Statement 4 – Incorrect: CRR is maintained with the RBI and SLR in liquid assets like government securities; banks maintain separate vault cash for daily operational needs, which is distinct from statutory requirements.
With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?
- Balance of trade
- Foreign assets
- Balance of invisibles
- Special Drawing Right
Select the correct answer using the code given below.
Detailed Explanation:
Current Account of the Balance of Payments (BoP) comprises two main components: Balance of Trade (visible items - exports and imports of goods) and Balance of Invisibles (invisible items - services, income, and current transfers).
Foreign Assets are part of the Capital Account/Financial Account, representing investment flows and changes in ownership of international assets. Special Drawing Rights (SDR) are IMF reserve assets recorded under Reserve Assets in the BoP, not in the Current Account.
If the interest rate is decreased in an economy, it will
Detailed Explanation:
When interest rates decrease, the cost of borrowing falls, making loans cheaper for businesses and entrepreneurs.
This encourages firms to take credit for capital investment in machinery, equipment, infrastructure, and expansion projects, thereby increasing investment expenditure in the economy.
Lower interest rates also reduce returns on savings (making saving less attractive) and stimulate consumption through cheaper EMIs, but the most direct and significant impact is on investment decisions by businesses.
In the context of food and nutritional security of India, enhancing the ‘Seed Replacement Rates’ of various crops helps in achieving the food production targets of the future. But what is/are the constraint/ constraints in its wider / greater implementation?
- There is no National Seeds Policy in place.
- There is no participation of private sector seed companies in the supply of quality seeds of vegetables and planting materials of horticultural crops.
- There is a demand-supply gap regarding quality seeds in case of low value and high volume crops.
Select the correct answer using the code given below.
Detailed Explanation:
❌ Statement 1 – Incorrect: India has the National Seeds Policy (2002) which provides a framework for seed certification, quality assurance, and encourages private sector participation.
❌ Statement 2 – Incorrect: Private sector seed companies like Mahyco, Syngenta, and Nunhems actively participate in supplying quality seeds of vegetables and horticultural crops, especially hybrid varieties.
✅ Statement 3 – Correct: There exists a demand-supply gap for quality certified seeds in low-value, high-volume crops (such as pulses, coarse cereals, and oilseeds) due to lower profitability and limited private sector investment in their seed production.
The sales tax you pay while purchasing a toothpaste is a
Detailed Explanation:
Sales tax (before GST) was levied and collected by State Governments under their constitutional powers over intra-state trade.
The Constitution (Entry 54, State List) empowered states to impose taxes on the sale or purchase of goods, making it a state subject for both imposition and collection.
What does venture capital mean?
Detailed Explanation:
Venture capital is long-term equity financing provided to start-ups and new entrepreneurial ventures with high growth potential but higher risk.
Option 1 is incorrect as venture capital is long-term, not short-term; Option 3 refers to bailout funds or emergency financing, not venture capital; Option 4 describes replacement/modernization capital, which is different from venture funding for new businesses.
The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in the news, are used in relation to
Detailed Explanation:
Marginal Standing Facility (MSF) Rate is the rate at which banks borrow overnight funds from the Reserve Bank of India (RBI) against government securities when facing acute liquidity shortfalls.
Net Demand and Time Liabilities (NDTL) represents the aggregate of a bank's demand deposits (current and savings accounts) and time deposits (fixed deposits), used to calculate statutory requirements like CRR and SLR.
Which of the following organizations brings out the publication known as ‘World Economic Outlook’?
Detailed Explanation:
World Economic Outlook (WEO) is a flagship report published by the International Monetary Fund (IMF) twice a year in April and October, providing comprehensive analysis of global economic developments and growth projections.
Other key IMF reports include the Global Financial Stability Report and the Fiscal Monitor.
UPSC Prelims 2014 - Indian Economy Chapter-wise Distribution
Agriculture
4 Qs (28.6%)Money, Banking & Financial System
3 Qs (21.4%)Public Finance & Fiscal Policy
2 Qs (14.3%)Indian Economy: Historical Background & Economic Reforms
2 Qs (14.3%)Financial Markets and Institutions
1 Qs (7.1%)External Sector
1 Qs (7.1%)International Trade and Economic Organizations
1 Qs (7.1%)UPSC Prelims 2014 - Indian Economy Questions FAQs
Q1 How many Indian Economy questions were asked in UPSC Prelims 2014?
Q2 What is the chapter-wise question distribution for Indian Economy in UPSC Prelims 2014?
- Agriculture: 4 questions (28.6%)
- Money, Banking & Financial System: 3 questions (21.4%)
- Public Finance & Fiscal Policy: 2 questions (14.3%)
- Indian Economy: Historical Background & Economic Reforms: 2 questions (14.3%)
- Financial Markets and Institutions: 1 questions (7.1%)
- External Sector: 1 questions (7.1%)
- International Trade and Economic Organizations: 1 questions (7.1%)