APPSC Group-1 2023 Economy Previous Year Questions

Ans: (1) Both (A) and (R) are true and (R) is the correct explanation for (A). (as per APPSC official final key)

Structural change means a change in the shares of the primary (agriculture), secondary (industry) and tertiary (services) sectors in national income. At Independence agriculture contributed more than half of India’s GDP; today it contributes under one-fifth, while services contribute more than half.

This shift happened because the process of economic growth began with planned development from 1951. As incomes rise, demand moves from food to manufactured goods and services (Engel’s law), so the non-farm sectors grow faster. So both A and R are true and R explains A.

Note:

• Colin Clark and Simon Kuznets studied structural change with growth.
• India’s growth path is unusual: it moved from agriculture straight to services (service-led growth).

Ans: (4) J.R. Hicks (as per APPSC official final key)

National income can be seen as the net value of all goods and services produced in a year (net social product), or as the total of incomes earned by the factors of production (social income). Both measures give the same figure, because every rupee of output becomes someone’s income.

The key credits the statement “Net Social Product and the Social Income are one and the same thing” to J.R. Hicks, who explained the circular flow of income in The Social Framework (1942). Hicks also gave the IS-LM model and the indifference curve analysis (with R.G.D. Allen).

Note:

• Three methods of national income: product, income and expenditure.
• Marshall defined national income as the net aggregate of commodities and services produced.

Ans: (2) Both (A) and (R) are true and (R) is the correct explanation for (A). (as per APPSC official final key)

Per capita income = national income ÷ population. If national income grows at 3% while population grows at 4%, the income per person falls even though total income rises.

This happened in many developing countries with high birth rates and falling death rates (the second stage of demographic transition). So A is true, R is true, and R correctly explains A.

Note:

• India’s NSO publishes per capita Net National Income at current and constant prices.
• A rise in per capita income is the usual measure of economic growth.

Ans: (3) 11th Five Year Plan (as per APPSC official final key)

India’s Five Year Plans ran from 1951 to 2017. Average GDP growth:

• 9th Plan (1997–2002): about 5.5% (target 6.5%).
• 10th Plan (2002–07): about 7.7% (target 8%).
• 11th Plan (2007–12): about 8% (target 9%), the highest of any plan despite the 2008 global crisis.
• 12th Plan (2012–17): about 6.7–7% (target 8%).

Note:

• 11th Plan theme: ‘Faster and More Inclusive Growth’; 12th: ‘Faster, More Inclusive and Sustainable Growth’.
• Planning Commission was replaced by NITI Aayog on 1 January 2015.

Ans: Question deleted by APPSC (official final key; no option is treated as correct)

This question was deleted by APPSC in the official final key, so no option is scored as correct.

The Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA, in force from February 2006) gives a legal right to at least 100 days of guaranteed wage employment a year to every rural household whose adult members volunteer for unskilled manual work. It is a rights-based, demand-driven scheme that generates wage employment in rural areas and creates durable assets.

Providing nutritious food is not a feature (that is the National Food Security Act, 2013, and PM POSHAN). The question was likely deleted because only one item (IV) is “not a feature”, and none of the options matches it alone.

Note:

• Work must be given within 15 days of demand, else unemployment allowance.
• At least one-third of beneficiaries should be women; work within 5 km.

Ans: (1) 15 – 64 years (as per APPSC official final key)

Demographic dividend is the economic growth potential that comes when the share of the working-age population (15–64 years) is larger than the dependent population (children under 15 and elderly 65+). The UNFPA uses the 15–64 age group.

India’s working-age share is above 60% and will stay high until about 2055, so India has a window of opportunity if it provides education, skills and jobs.

Note:

• Dependency ratio = (0–14 + 65+) ÷ (15–64) × 100.
• Japan and Europe face an ageing population.

Ans: (2) II, III and IV (as per APPSC official final key)

Beti Bachao, Beti Padhao (“Save the daughter, educate the daughter”) was launched on 22 January 2015 at Panipat, Haryana. It is a joint scheme of the Ministries of Women and Child Development, Health and Family Welfare, and Education.

Its objectives are to address the declining Child Sex Ratio (918 in 2011), prevent gender-biased sex-selective elimination, ensure survival, protection and education of the girl child, and promote women’s empowerment and gender equality. Legal assistance to girls is not its objective. So II, III and IV.

Note:

• Sukanya Samriddhi Yojana was launched alongside it.
• National Girl Child Day: 24 January.

Ans: (1) Both (A) and (R) are true and (R) is the correct explanation for (A). (as per APPSC official final key)

Agriculture in India depends heavily on the monsoon; about half of the net sown area is rain-fed. When rains fail, farm output falls, which reduces rural incomes, demand for industrial goods, and so overall national income growth. Drought years such as 1965–66, 1979–80, 1987 and 2002 saw sharp falls in GDP growth.

So both statements are true and the uncertainty of rains explains why national income fluctuates with agriculture.

Note:

• Agriculture employs about 45% of India’s workforce.
• Kharif crops depend on the south-west monsoon.

Ans: (2) a-II, b-IV, c-I, d-III (as per APPSC official final key)

National income accounts divide the economy into sectors:

• Primary sector – agriculture, forestry, fishing, mining.
• Secondary (industrial) sector – manufacturing, construction, and electricity, gas and water supply.
• Tertiary (service) sector – trade, hotels, transport, finance, public administration.

India’s GDP estimates were prepared by the Central Statistical Organisation (CSO), now merged into the National Statistical Office (2019). So a-II, b-IV, c-I, d-III.

Note:

• First national income estimate: Dadabhai Naoroji (1867–68).
• National Income Committee (1949): P.C. Mahalanobis.

Ans: (3) Interest Receipts from Public Debt (as per APPSC official final key)

National income includes only incomes earned for producing goods and services (factor incomes): wages and salaries, rent, interest and profits, including profits of public sector undertakings.

Transfer payments are excluded because they are not payments for current production. Interest on public debt is treated as a transfer payment, since governments mostly borrow to meet consumption or war expenses. Tax revenue is also a transfer from people to the state. So (3) is the answer per the key.

Note:

• Other exclusions: old-age pensions, scholarships, sale of second-hand goods, capital gains.
• National income = NNP at factor cost.

Ans: (1) a-II, b-III, c-IV, d-I (as per APPSC official final key)

Major industrial locations of India:

• Iron and Steel – Jamshedpur (TISCO, 1907, by Jamsetji Tata; first large steel plant).
• Jute – Kolkata region (Hooghly basin; first mill at Rishra, 1855).
• Oil refinery – Barauni (Bihar), built with Soviet help (1964).
• Integral Coach Factory – Perambur, Chennai (1955).

So a-II, b-III, c-IV, d-I.

Note:

• Digboi (Assam, 1901) is India’s oldest refinery.
• Rail Coach Factory Kapurthala; Modern Coach Factory Rae Bareli.

Ans: (2) I and II only (as per APPSC official final key)

Cash Reserve Ratio (CRR) is the share of a bank’s net demand and time liabilities that it must keep as cash with the RBI. It earns no interest.

When the RBI raises CRR, banks have less money to lend. Credit becomes costlier, money in circulation falls, people’s purchasing power falls and demand for goods and services falls, which helps control inflation. Banks’ lending capacity decreases, not increases. So I and II.

Note:

• CRR is under Section 42 of the RBI Act, 1934.
• Other tools: repo rate, reverse repo, SLR, open market operations.

Ans: (4) I, II and III (as per APPSC official final key)

The Statutory Liquidity Ratio (SLR) is the share of a bank’s net demand and time liabilities that it must keep as liquid assets with itself (Section 24 of the Banking Regulation Act, 1949). It can be kept as:

• cash;
• gold (at current market value);
• unencumbered investments in approved securities such as government securities and Treasury Bills.

Priority sector loans are advances, not liquid assets, so they do not count. So I, II and III.

Note:

• SLR is maintained by the bank itself; CRR with RBI.
• Priority sector lending target: 40% of adjusted net bank credit.

Ans: (1) Treasury Bills and Government Bond Market. (as per APPSC official final key)

The gilt-edged market is the market for government securities: Treasury Bills and government bonds of the Central and State governments. “Gilt-edged” (gold-edged) means they are safe and carry no default risk, because the government guarantees repayment. The RBI manages this market.

Note:

• Treasury Bills have maturities of 91, 182 and 364 days.
• Money market = short-term funds (under 1 year); capital market = long-term.

Ans: (2) A loan whose instalment of principal and interest amount has remained overdue for a period of 90 days. (as per APPSC official final key)

A Non-Performing Asset (NPA) is a loan or advance where interest and/or instalment of principal remains overdue for more than 90 days (RBI norms since 2004; earlier 180 days).

NPAs are classified as sub-standard (NPA up to 12 months), doubtful (NPA over 12 months) and loss assets (identified as uncollectable). Banks must make provisions for them.

Note:

• SARFAESI Act 2002 and IBC 2016 help recover bad loans.
• Agricultural loans: NPA if overdue for two crop seasons (short duration).

Ans: (3) Committee on Financial System (as per APPSC official final key)

In 1991 the Government of India set up the Committee on the Financial System under M. Narasimham (Narasimham Committee-I) to reform the banking sector. It recommended reducing SLR and CRR, deregulating interest rates, prudential norms, entry of private and foreign banks, and setting up Asset Reconstruction Funds.

Narasimham Committee-II (1998) was the Committee on Banking Sector Reforms. The Raja Chelliah Committee (1991) dealt with tax reforms; the Tendulkar Committee with poverty estimation.

Note:

• Basel norms set capital adequacy for banks.
• Malhotra Committee (1993): insurance sector reforms.

Ans: (1) I, II and IV (as per APPSC official final key)

Para-banking refers to activities that banks may undertake besides their core business of deposits and loans, with RBI permission. These include credit cards, insurance business (bancassurance), factoring, equipment leasing, hire purchase, mutual funds, merchant banking and pension fund management.

“Credit to para-military personnel” is just ordinary lending, not a para-banking service. So I, II and IV.

Note:

• Factoring: buying a firm’s receivables at a discount.
• Banks set up subsidiaries for many para-banking activities.

Ans: (1) Both (A) and (R) are true and (R) is the correct explanation for (A). (as per APPSC official final key)

GST (from 1 July 2017) replaced many indirect taxes such as excise duty, service tax and VAT. Under the old system tax was levied on a price that already included tax, so taxes piled up (cascading effect, or tax on tax).

GST gives input tax credit: tax paid on inputs is set off against tax on outputs, so only the value added is taxed. Removing the cascading effect lowers costs, so GST is considered non-inflationary in the long run. So both are true and R explains A, as per the key.

Note:

• GST rate slabs (from Sept 2025): 5% and 18%, with 40% for sin/luxury goods.
• Petroleum products and alcohol for human consumption are outside GST.

Ans: (2) a-II, b-IV, c-I, d-III (as per APPSC official final key)

Chairmen of recent Finance Commissions (Article 280):

• 10th (1995–2000) – K.C. Pant
• 11th (2000–05) – A.M. Khusro
• 12th (2005–10) – C. Rangarajan
• 13th (2010–15) – Vijay L. Kelkar

So a-II, b-IV, c-I, d-III.

Note:

• 14th: Y.V. Reddy (42% devolution); 15th: N.K. Singh (41%).
• 16th: Arvind Panagariya.

Ans: (2) (A) is true, but (R) is not the correct explanation of (A). (as per APPSC official final key)

When a government finances its budget deficit by printing new currency (borrowing from the central bank, called monetisation of the deficit), money supply rises without a matching rise in goods. “Too much money chasing too few goods” causes prices to rise. So A is true.

The Reason that more goods will be produced does not explain price rise; if more goods were produced, prices would tend to fall. So R is not the correct explanation of A.

Note:

• Ad hoc Treasury Bills (automatic monetisation) were ended in 1997.
• FRBM Act, 2003 limits fiscal deficit.

Ans: (3) Authorisation of Expenditure and Distribution of Revenues. (as per APPSC official final key)

The Andhra Pradesh Reorganisation Act, 2014 divided the state into Andhra Pradesh and Telangana (appointed day 2 June 2014). It has 12 parts and 13 schedules. Main parts:

• Part II – Reorganisation of the State; Part III – Representation in legislatures;
• Part IV – High Court;
• Part V – Authorisation of Expenditure and Distribution of Revenues;
• Part VI – Apportionment of Assets and Liabilities;
• Part IX – Management and Development of Water Resources.

Note:

• Hyderabad was the common capital for up to 10 years (to 2 June 2024).
• Section 46: grants and distribution of revenues.

Ans: (4) National Project. (as per APPSC official final key)

Polavaram (Indira Sagar) project is a multipurpose project on the Godavari in Eluru district (earlier West Godavari). Section 90 of the AP Reorganisation Act, 2014 declared it a National Project, and the Centre bears the cost of the irrigation component. It is executed by the AP government under the Polavaram Project Authority.

It will irrigate land in the Godavari districts, divert 80 TMC of Godavari water to the Krishna through the right canal, and supply water to Visakhapatnam.

Note:

• Seven mandals of Khammam were transferred to AP for Polavaram.
• Pattiseema lift links Godavari and Krishna.

Ans: (1) 13 Schedules (as per APPSC official final key)

The Andhra Pradesh Reorganisation Act, 2014 has 108 sections and 13 Schedules. Schedules include the allotment of Rajya Sabha members (First), the delimitation of constituencies, pension liabilities, the list of institutions (Ninth and Tenth Schedules), the principles for river management boards (Eleventh), coal, oil and power (Twelfth), and education and infrastructure commitments (Thirteenth) such as IIT, IIM, AIIMS, the Visakhapatnam–Chennai industrial corridor and a new railway zone.

Note:

• Ninth Schedule companies and Tenth Schedule institutions are a long-running bifurcation dispute.
• South Coast Railway zone (Visakhapatnam) was announced in 2019.

Ans: (4) Minister of Water resources, Government of India as chairperson and Chief Ministers of Andhra Pradesh and Telangana as members. (as per APPSC official final key)

Under Section 84 of the AP Reorganisation Act, 2014, the Central Government set up an Apex Council to supervise the Godavari and Krishna River Management Boards. It consists of the Union Minister of Water Resources (Jal Shakti) as Chairperson and the Chief Ministers of Andhra Pradesh and Telangana as members.

The Krishna River Management Board (KRMB) and Godavari River Management Board (GRMB) were set up under Section 85.

Note:

• KRMB is headquartered at Hyderabad (moving to AP); GRMB at Hyderabad.
• Krishna Water Disputes Tribunal-II: Justice Brijesh Kumar.

Ans: (1) ₹ 13,500 is given to a farmer’s family in three instalments every year. (as per APPSC official final key)

YSR Rythu Bharosa – PM Kisan (from October 2019) gave each farmer family ₹13,500 a year: ₹7,500 from the State and ₹6,000 from the Centre’s PM-KISAN. It was paid in three instalments (₹7,500 in May, ₹4,000 in October and ₹2,000 in January). Tenant farmers from SC, ST, BC and minority communities were also covered.

So statement (1) is correct; the ₹7,000/₹6,000 split and four instalments are wrong.

Note:

• PM-KISAN (2019): ₹6,000 a year in three instalments of ₹2,000.
• In 2025 AP replaced it with Annadata Sukhibhava (₹20,000 a year including PM-KISAN).

Ans: (4) Vahana Mitra (as per APPSC official final key)

Navaratnalu (“nine gems”) were the nine flagship welfare promises of the AP government formed in 2019: YSR Rythu Bharosa, Fee Reimbursement, Aarogyasri, Jala Yagnam, prohibition of liquor, Amma Vodi, YSR Aasara, YSR Pension Kanuka and Pedalandariki Illu (housing for all poor).

YSR Vahana Mitra (₹10,000 a year to auto and taxi drivers who own their vehicle) was a separate welfare scheme, not one of the nine.

Note:

• Amma Vodi: ₹15,000 a year to mothers who send children to school.
• YSR Cheyutha: support to women aged 45–60 from SC/ST/BC/minorities.

Ans: (3) Disha (as per APPSC official final key)

The Disha app (2020) of the Andhra Pradesh police is an SOS service for women. Pressing the SOS button, or shaking the phone, sends the user’s location to the police control room, and the nearest patrol vehicle responds. It is linked to the AP Disha Bill (2019), which proposed speedy trials of crimes against women, and Disha police stations.

Spandana was a grievance redress programme; Prajwala is an anti-trafficking NGO in Hyderabad.

Note:

• Disha is named after the 2019 Hyderabad rape-murder victim.
• National emergency number: 112; women’s helpline: 181.

Ans: (3) Crop Cultivator Rights Card for providing assistance to lease-holders. (as per APPSC official final key)

The Crop Cultivator Rights Card (CCRC) was issued under the AP Crop Cultivators Rights Act, 2019. It identifies tenant (lease) farmers for 11 months without affecting the landowner’s rights, so tenants can get crop loans, insurance, input subsidy and Rythu Bharosa benefits.

It replaced the earlier Loan Eligibility Cards (LEC) under the AP Land Licensed Cultivators Act, 2011.

Note:

• Tenant farmers form a large share of cultivators in coastal AP.
• e-Crop booking records the crop sown on each plot.

Ans: (1) Parvathipuram Manyam (as per APPSC official final key)

In April 2022 Andhra Pradesh was reorganised from 13 to 26 districts. Among the options, Parvathipuram Manyam, carved out of Vizianagaram and Srikakulam, is the smallest by area. Kurnool, Annamayya and Palnadu are much larger.

Overall, Visakhapatnam district is the smallest district of the state after the reorganisation, and Prakasam is the largest.

Note:

• New districts formed on 4 April 2022 (notified 3 April 2022).

Ans: (4) Dandamudi Rajagopal Rao (as per APPSC official final key)

Dandamudi Rajagopal Rao (1916–1981), from Krishna district (near Gudivada), Andhra Pradesh, was a famous heavyweight weightlifter and bodybuilder, called the “Indian Hercules”. He won medals at the Asian Games (1951) and represented India at the 1952 Helsinki Olympics. He also acted in Telugu films.

Sathish Sivalingam (Tamil Nadu) and Kunjarani Devi (Manipur) are weightlifters from other states.

Note:

• Karnam Malleswari (Srikakulam, AP) won bronze at Sydney 2000, India’s first woman Olympic medallist.
• Dhruva Chakravarthi is not a weightlifter.