MCQs on India’s GDP Surge vs IMF’s Grade C: A Tale of Growth, Gaps, and Governance
1. India posted 8.2% GDP growth even as Nominal GDP grew 8.8%. This suggests:
A. Inflation was extremely high
B. Deflation occurred in multiple sectors
C. Real growth was strong as inflation remained moderate
D. GVA contracted
Answer: C
Explanation: Nominal ≈ Real → inflation is low, so growth is genuine.
2. IMF’s “Grade C” for India’s national accounts primarily reflects:
A. Low economic growth
B. Political instability
C. Weaknesses in statistical systems and data quality
D. External debt crisis
Answer: C
Explanation: IMF is grading India’s data architecture, not GDP growth.
3. Which data limitation MOST affects India’s ability to measure real output accurately?
A. Over-reliance on retail inflation
B. Absence of Producer Price Index (PPI)
C. Limited use of GDP deflator
D. Misclassification of exports
Answer: B
Explanation: Without PPI, India uses WPI-based deflators → distorts real sector estimation.
4. The IMF criticises India for “excessive use of single deflation”. This may lead to:
A. Overestimation of labour force
B. Underestimation of inflation
C. Cyclical biases in GDP measurement
D. Double counting of exports
Answer: C
Explanation: Single deflation misinterprets price vs quantity effects.
5. Which of the following BEST explains why high GDP growth does not guarantee structural strength?
A. GDP excludes agriculture
B. GDP does not reflect governance capacity and institutional depth
C. GDP collapses during inflation
D. GDP includes informal sector fully
Answer: B
Explanation: IMF emphasises “architecture of data and governance”, not headline numbers.
6. The GVA increase from ₹82.88 lakh crore to ₹89.41 lakh crore indicates:
A. Inflationary spike
B. Real growth across agriculture, industry, and services
C. Decline in PFCE
D. Contraction in productive sectors
Answer: B
Explanation: GVA reflects real value-added; rise means broad-based output growth.
7. The mismatch between India’s employment structure and output structure suggests:
A. High productivity in agriculture
B. disproportionate employment in low-productivity sectors
C. Labour surplus in manufacturing
D. High wages suppressing demand
Answer: B
Explanation: Agriculture employs many but contributes little to GVA → productivity gap.
8. Mining output stagnated at 0.04% mainly because:
A. Policy paralysis
B. Weak demand in EU and U.S.
C. Unusually long monsoon disrupting extraction
D. Sharp fall in global commodity prices
Answer: C
Explanation: Weather disruptions undermined mining.
9. The IMF's concern about lack of consolidated State-level fiscal data after 2019 points to:
A. Union–State disputes over GST shares
B. Weak fiscal federal reporting systems
C. Decline in State revenue productivity
D. Misuse of Finance Commission grants
Answer: B
Explanation: Missing State data weakens national accounts reliability.
10. Even with 8.2% GDP growth, agriculture grew only 3.5%. This indicates:
A. Agricultural reforms are complete
B. Structural bottlenecks persist despite good monsoons
C. Rural wages exceed inflation
D. Agriculture is fully mechanised
Answer: B
Explanation: Fundamental productivity constraints limit agricultural growth.
11. Which indicator MOST convincingly signalled genuine domestic demand revival?
A. Fiscal deficit declined
B. Forex reserves increased
C. Private Final Consumption Expenditure rose 7.9%
D. WPI inflation turned negative
Answer: C
Explanation: PFCE reflects household spending → strong consumption.
12. Nominal GDP grew 8.8% and GVA 7.9%. This differential suggests:
A. Services sector contracted
B. WPI spiked
C. Inflation remains modest
D. Agricultural deflation
Answer: C
Explanation: A small gap means inflation is under control.
13. Why does IMF highlight the outdated base year (2011–12)?
A. It reduces fiscal deficit
B. It distorts real GDP measurement and economic weight shifts
C. It improves inflation calculation
D. It removes informal sector from national accounts
Answer: B
Explanation: Base year change captures new consumption patterns & sectoral shifts.
14. India’s stable rupee in 2024–25 masked:
A. RBI abandoning forex interventions
B. Inflow of sovereign loans
C. Continued pressure from strong USD and volatile foreign capital
D. Excessive rupee printing
Answer: C
Explanation: External factors forced RBI to intervene frequently.
15. Strong GST and direct tax collections in 2024–25 indicate:
A. Excessive tax rates
B. Increased formalisation and economic activity
C. Decline in private investment
D. Reduction in urban consumption
Answer: B
Explanation: Higher compliance + higher activity → strong revenues.
16. Why can India’s services-led growth be misleading in measuring structural transformation?
A. Services employ the fewest people
B. Services have the highest productivity
C. Services exports do not affect GDP
D. Manufacturing grows faster than services
Answer: A
Explanation: India’s services sector contributes 60% of GDP but employs far fewer workers → jobless growth concerns.
17. Which of the following MOST accurately reflects India’s export vulnerability as per RBI?
A. High dependency on Middle East markets only
B. Rising global protectionism and tariff uncertainties
C. Decline in global oil demand
D. Weak domestic currency
Answer: B
Explanation: Global trade tensions reduce export prospects.
18. IMF’s Grade C implies which of the following policy priorities for India?
-
Improve national accounts methodology
-
Update base year
-
Strengthen State-level fiscal reporting
-
Increase GST rates
A. 1, 2 and 3 only
B. 2 and 4 only
C. 1 and 4 only
D. 1, 2, 3, and 4
Answer: A
Explanation: GST rate changes have no link to accounting quality.
19. The growth of financial services by 10.2% indicates:
A. Lower bank lending
B. Decline in urban credit demand
C. High transaction volumes and credit expansion
D. Fall in digital payments
Answer: C
Explanation: Indicates strong financial sector activity + credit penetration.
20. Which of the following BEST summarises the "tension" between India’s GDP numbers and IMF’s assessment?
A. India is hiding recessionary conditions
B. High growth is not supported by equally strong statistical and institutional frameworks
C. IMF is biased against India
D. GDP is irrelevant for policymaking
Answer: B
Explanation: Growth is strong, but data systems behind it need strengthening.
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