JAIIB Paper 1 Module A Quiz 3

The economy was predominantly agrarian, with village-based crafts and extensive local production and exchange. This does not mean that pre-British India lacked trade: India also had significant domestic and international trade networks. The key distinction is that agriculture and traditional production systems were central to livelihoods.

Structural change refers to a shift in the relative contribution of sectors and the composition of employment and output. India’s services sector has become a major contributor to output, while a substantial share of the workforce remains dependent on agriculture. This uneven shift is important when discussing productivity and job creation.

Planning was used to set national priorities, mobilise scarce resources, build infrastructure and industrial capacity, reduce poverty and promote balanced development. Planning did not mean that every economic decision was made by the government; India used a mixed-economy approach.

Indicative planning sets broad objectives, forecasts and policy signals to influence decisions by public and private actors. It does not normally impose binding production allocations on every private enterprise. Compulsory central planning, by contrast, relies on directives and mandatory targets.

NITI Aayog was established in 2015 as the Government of India’s policy think tank, replacing the Planning Commission. It promotes cooperative federalism and policy advice. It does not allocate plan funds in the manner associated with the former Planning Commission.

The Green Revolution involved the use of high-yielding varieties alongside irrigation, fertilisers, pesticides and improved farm practices, raising cereal production particularly in regions such as Punjab, Haryana and western Uttar Pradesh. It also had uneven regional and environmental effects.

The quaternary sector is commonly associated with knowledge-intensive services such as research, data analysis, information technology and specialised information services. Mining is primary-sector activity, manufacturing is secondary, and retail is tertiary. Sector classifications can vary in detail, but knowledge and information work is the standard distinction.

From 1 April 2025, classification uses both investment in plant and machinery/equipment and annual turnover. Revised ceilings are: micro ₹2.5 crore investment and ₹10 crore turnover; small ₹25 crore and ₹100 crore; medium ₹125 crore and ₹500 crore. Both criteria apply, and exceeding either ceiling can affect classification.

The RBI’s 2025 PSL Directions list Agriculture, MSMEs, Export Credit, Education, Housing, Social Infrastructure, Renewable Energy and Others. Loans must satisfy the applicable eligibility criteria and limits; a sector label alone does not automatically make every loan eligible.

MSMEs contribute to production, employment, entrepreneurship, supply chains and exports. Access to formal credit can help them invest, manage working capital and adopt technology. Credit alone is not sufficient; market access, skills, infrastructure and sound business practices also influence outcomes.

Social infrastructure comprises facilities and services that build human capabilities and welfare, including health, education, sanitation and related services. Such investments can improve productivity and inclusion over time, although the benefits depend on quality, accessibility and effective delivery.

Reliable transport and logistics infrastructure reduces transaction costs, delays and inventory requirements, improving market access and competitiveness. The benefits can spread across manufacturing, agriculture and services. It does not automatically guarantee exports or eliminate all logistics costs.

Globalisation can widen access to export markets, technology, capital and global value chains. It can also expose domestic firms and workers to stronger competition and external shocks. Outcomes depend on productivity, institutions, skills and adjustment policies.

Protectionism uses trade barriers such as tariffs, quotas or restrictive measures to shield domestic industries from foreign competition. It may support selected producers in the short run but can raise input and consumer prices and invite retaliation.

The 1991 reforms are commonly summarised as liberalisation, privatisation and globalisation (LPG), alongside stabilisation measures. They reduced several industrial licensing and trade restrictions, opened areas to greater private participation and expanded integration with the world economy.

Foreign direct investment generally involves a lasting interest and significant influence or control in an enterprise in another economy. A greenfield plant is a typical example. Foreign portfolio investment generally involves financial investments without the same degree of management influence.

The WTO provides a rules-based framework for international trade, administers trade agreements, serves as a forum for negotiations and operates a dispute-settlement framework subject to its current institutional constraints. It is not a global central bank and does not lend for development projects like the World Bank.

The IMF focuses on international monetary cooperation, macroeconomic and financial stability, surveillance and balance-of-payments support. The World Bank Group’s core development role includes financing and expertise for long-term development and poverty reduction. Their mandates overlap in some areas but are not identical.

Sustainable development seeks to meet present needs without undermining future generations’ ability to meet their needs. It integrates economic, social and environmental dimensions. Energy efficiency and lower emissions can contribute to environmental sustainability, but the overall assessment should also consider social and economic effects.

Jobless or weakly employment-generating growth refers to output expanding without a proportionate increase in employment. Possible contributors include capital-intensive production, skill mismatches and growth concentrated in sectors with limited labour absorption. The policy response may include labour-intensive manufacturing, skills, infrastructure and support for productive enterprises.