HPAS 2011 Economy Questions — Detailed Solutions
Complete option-wise explanations, important concepts, exam traps, related facts and likely similar questions for HPAS, UPSC and State PCS revision.
Which Indian city has the highest population according to 2011 Census?
💡 Why is Mumbai correct?
According to Census 2011, Greater Mumbai had a population of approximately 12.44 million (1.24 crore), making it the most populous Indian city when city/municipal population is considered.
| City | Approx. Census 2011 City Population | Position among these options |
|---|---|---|
| Mumbai | 12.44 million | 1st |
| Delhi | 11.03 million | 2nd |
| Chennai | 4.65 million | 3rd |
| Kolkata | 4.50 million | 4th |
🔍 Explanation of Every Option
Do not automatically treat city population, Urban Agglomeration (UA) and metropolitan-region population as the same thing. Their administrative boundaries are different.
- Most populous city according to Census 2011.
- Difference between a statutory town, census town and Urban Agglomeration.
- Most populous states and Union Territories in Census 2011.
- Urbanisation level, literacy rate, sex ratio and population density in Census 2011.
- Difference between Delhi, New Delhi and the National Capital Territory of Delhi.
Which of the following Indian Companies has been listed at the top in Forbes-2000 list?
💡 Detailed Explanation
In the 2011 Forbes Global 2000 ranking, Reliance Industries Limited (RIL) was the highest-ranked Indian company. It was placed at approximately 121st globally.
It is a ranking of major publicly traded companies across the world. The ranking considers major corporate indicators such as sales, profits, assets and market value.
🔍 Explanation of Every Option
- RIL: highest-ranked Indian company.
- State Bank of India: followed RIL among leading Indian companies.
- ONGC: also figured prominently among Indian firms.
- JPMorgan Chase occupied the top global position in the 2011 list.
A company that is India’s highest-ranked company in one year’s list need not hold the same position in another year. Always identify the year mentioned in the question.
‘Nirmal Bharat Abhiyan Yojana’ is associated with:
💡 Detailed Explanation
This question refers to the older urban Nirmal Bharat Abhiyan, which was an integral sanitation component of the Valmiki Ambedkar Awas Yojana (VAMBAY).
Under this programme, community toilets were to be constructed particularly in congested urban slums where individual household toilets were difficult to provide.
- Launched in 2001.
- Targeted urban slum dwellers below the poverty line.
- Its principal housing component dealt with construction/upgradation of dwelling units.
- Nirmal Bharat Abhiyan was its sanitation component for community toilets.
🔍 Explanation of Every Option
This is a favourite source of confusion in competitive examinations.
- Older urban NBA: sanitation/community-toilet component of VAMBAY for urban slums.
- 2012 rural NBA: the Total Sanitation Campaign (TSC) was renamed Nirmal Bharat Abhiyan to accelerate rural sanitation.
- The later rural NBA was subsequently restructured into Swachh Bharat Mission (Gramin) from 2 October 2014.
- VAMBAY was associated with which target group?
- Which component of VAMBAY dealt with community sanitation?
- Total Sanitation Campaign was renamed as what in 2012?
- Nirmal Bharat Abhiyan was restructured into which mission in 2014?
- Distinguish urban VAMBAY-linked NBA from the later rural NBA.
The maximum limit of Foreign Direct Investment (FDI) in public sector banking is:
💡 Why was the Question Scrapped?
The foreign-investment ceiling applicable to public sector banks was 20%. Since 20% was not present among the four options, there was no correct option.
🔍 Explanation of Every Option
- Public sector banks: 20% foreign investment ceiling, through the Government route.
- Private sector banks: up to 74% foreign investment, subject to applicable conditions.
- In private-sector banking, up to 49% is permitted through the automatic route and beyond 49% up to 74% requires the Government route.
As of the official Government banking information available in 2026, the formal foreign-investment ceiling for public sector banks remains 20%. Remember the enacted rule, not merely proposals reported in the media.
- FDI limit in public-sector banks.
- FDI limit in private-sector banks.
- Difference between automatic route and Government route.
- Difference between FDI and FPI.
- Sectoral caps in banking, insurance, defence and other regulated sectors.
Which of the following plans is meant for constructing houses for rural people?
💡 Detailed Explanation
Indira Awaas Yojana (IAY) was the major Central rural-housing programme for providing housing assistance to poor rural households.
It began in 1985–86 and was later restructured as Pradhan Mantri Awaas Yojana–Gramin (PMAY-G) with effect from 1 April 2016.
🔍 Explanation of Every Option
- IAY: rural housing.
- PMAY-G: present successor rural-housing programme.
- PMAY-U: urban housing programme.
- VAMBAY: historical programme for urban slum dwellers.
The correct historical spelling is generally Indira Awaas Yojana. The question prints “Indra Avas Yojana”, but the intended scheme is clearly IAY.
- IAY was replaced/restructured by which scheme?
- PMAY-G is administered for which population group?
- Difference between PMAY-G and PMAY-U.
- Full form and purpose of PURA.
- Which housing scheme historically targeted urban slum dwellers?
As per 13th Finance Commission Recommendations during 2010–15, transfers to the states in the form of ‘grant-in-aid’ are expected to be:
💡 Detailed Explanation
The Thirteenth Finance Commission recommended total grants-in-aid of approximately ₹3,18,581 crore to the states over its award period 2010–2015.
- Constituted under Article 280 of the Constitution.
- Chairman: Dr. Vijay L. Kelkar.
- Award period: 2010–15.
- Recommended states’ share in the divisible pool of Central taxes at 32%.
- Total recommended grants-in-aid: ₹3,18,581 crore.
🔍 Explanation of Every Option
| Important Grant Category | 13th FC Recommendation |
|---|---|
| Local Bodies | ₹87,519 crore |
| Disaster Relief | ₹26,373 crore |
| Post-devolution Non-Plan Revenue Deficit | ₹51,800 crore |
| Elementary Education | ₹24,068 crore |
| Environment | ₹15,000 crore |
| Total Grants-in-Aid | ₹3,18,581 crore |
- Finance Commission is constituted under Article 280.
- It is constituted by the President of India.
- Normally constituted every five years or earlier if necessary.
- It recommends vertical and horizontal distribution of divisible taxes.
- It also recommends principles governing grants-in-aid to states.
- 13th FC → Vijay Kelkar → 2010–15 → 32% tax devolution.
- 14th FC raised states’ tax-devolution share from 32% to 42%.
Which of the following is/are the component(s) of Gross Domestic
Capital Formation (GDCF)?
1. Gross Domestic Savings
2. Net Capital Inflow
3. Direct Foreign Investment
💡 Core Concept
In an open economy, domestic investment or capital formation can be financed through domestic savings as well as net capital inflow from abroad.
🔍 Statement-Wise Explanation
🔍 Explanation of Answer Options
- GFCF = Gross Fixed Capital Formation: investment in fixed productive assets such as machinery, buildings and infrastructure.
- Gross Capital Formation is broader and can also include changes in inventories and other specified capital items.
- A higher capital-formation rate generally indicates greater investment in productive capacity, though quality and efficiency of investment also matter.
- Difference between saving and investment.
- Difference between gross and net capital formation.
- Difference between GFCF and total capital formation.
- Components of domestic saving: household, private corporate and public sectors.
- Whether FDI and FPI form part of foreign capital flows.
- Relationship between current-account deficit and foreign capital requirements.
Ethanol mixed petrol is being sold in various states w.e.f. January 1, 2003. The percentage of ethanol in petrol is:
💡 Detailed Explanation
When the Ethanol Blended Petrol programme was introduced on the scale referred to in the question from 1 January 2003, petrol was blended with 5% ethanol.
🔍 Explanation of Every Option
- E5: petrol containing 5% ethanol.
- E10: petrol containing 10% ethanol.
- E20: petrol containing 20% ethanol.
- E85: a high-ethanol blend used in suitably designed flex-fuel vehicles.
India’s ethanol-blending programme has expanded enormously since the 2003 E5 stage. India reached approximately 20% ethanol blending (E20) in the 2025–26 ethanol supply year.
- Reduces dependence on imported crude oil.
- Saves foreign exchange.
- Creates additional demand for agricultural feedstocks.
- Supports domestic biofuel production.
- Can reduce certain lifecycle greenhouse-gas emissions.
- Improves energy diversification and energy security.
The answer depends on the date in the question. For January 2003 the answer is 5%; a current question may instead refer to India’s much higher E20 blending level.
At present the National Commission on Population is under:
The supplied draft marked (a) Planning Commission. However, official Government records around 2010–12 show the National Commission on Population being dealt with through the Ministry of Health & Family Welfare.
The confusion is understandable because the Deputy Chairman of the Planning Commission was associated with the Commission and the Planning Commission had an important coordination role.
💡 National Commission on Population — Key Facts
- Constituted on 11 May 2000 following the National Population Policy, 2000.
- It is headed by the Prime Minister.
- Its purpose includes reviewing and monitoring implementation of the National Population Policy.
- It promotes coordination between health, education, development and demographic programmes.
- It seeks to facilitate population stabilisation through coordinated policy action.
🔍 Explanation of Every Option
- Focuses on population stabilisation through a rights-based and development-oriented approach.
- Links population outcomes with reproductive health, education and women’s empowerment.
- Emphasises voluntary and informed choice in family-welfare services.
- The National Commission on Population was created to oversee implementation of the policy.
- Who chairs the National Commission on Population? — Prime Minister.
- When was the National Population Policy adopted? — 2000.
- When was the National Commission on Population constituted? — May 2000.
- Which ministry handles family-welfare and population matters?
- Objectives of National Population Policy, 2000.
- Meaning of population stabilisation and replacement-level fertility.
Consider the following statements:
1. The repo rate is the rate at which other banks borrow from
the Reserve Bank of India.
2. A value of 0 for Gini coefficient in a country implies that
there is perfectly equal income for everyone in its population.
Which of the statements given above is/are correct?
💡 Statement 1 — Repo Rate
Correct. Repo rate is the interest rate at which the Reserve Bank of India provides liquidity to eligible participants against eligible collateral such as government securities.
Commercial banks need short-term liquidity → they provide eligible securities as collateral → RBI lends funds → interest is charged at the repo rate.
💡 Statement 2 — Gini Coefficient
Correct. The Gini coefficient measures inequality in the distribution of income or consumption.
The indicator is also frequently expressed as an index from 0 to 100, in which case 0 represents perfect equality and 100 represents maximum inequality.
🔍 Explanation of Every Option
- Repo Rate: RBI injects/provides liquidity against eligible collateral.
- SDF: RBI absorbs liquidity without requiring collateral from RBI.
- MSF: emergency/overnight borrowing facility available to eligible banks at a rate above repo.
- CRR: portion of banks’ NDTL maintained as cash balance with RBI.
- SLR: specified proportion of NDTL maintained in prescribed liquid assets.
Repo generally injects liquidity into the banking system, while liquidity-absorption facilities operate in the opposite direction.
- The Lorenz Curve graphically represents distribution.
- A line of perfect equality would show every cumulative share of population receiving the same cumulative share of income.
- The farther the Lorenz Curve lies from the equality line, the greater the inequality.
- The Gini coefficient summarises this inequality numerically.
- Effect of a repo-rate increase on borrowing and liquidity.
- Difference between Repo, SDF, MSF, CRR and SLR.
- Who determines the policy repo rate? — Monetary Policy Committee.
- Interpretation of Gini values.
- Relationship between Lorenz Curve and Gini coefficient.
- Whether a lower Gini indicates greater or lower inequality.
Tarapore Committee was associated with which one of the following?
💡 Detailed Explanation
The Tarapore Committee, chaired by S. S. Tarapore, is associated with India’s roadmap towards capital account convertibility.
- 1997: Committee on Capital Account Convertibility.
- 2006: Committee on Fuller Capital Account Convertibility.
- Both were chaired by S. S. Tarapore.
🔍 Explanation of Every Option
Current-account convertibility concerns conversion of currency for transactions such as trade in goods and services, travel, education, remittances and similar current transactions.
Capital-account convertibility concerns conversion connected with cross-border acquisition or disposal of financial and capital assets and liabilities.
India moved to current-account convertibility in 1994 under Article VIII of the IMF framework, while capital-account liberalisation has remained gradual and calibrated rather than completely unrestricted.
- S. S. Tarapore → Capital Account Convertibility.
- Year of first Tarapore Committee → 1997.
- Year of Committee on Fuller CAC → 2006.
- Difference between current-account and capital-account convertibility.
- India attained current-account convertibility in 1994.
- Benefits and risks of free capital mobility.
- Why forex-reserve adequacy matters during capital-account liberalisation.
Participatory Notes (PNs) are associated with which one of the following?
💡 Detailed Explanation
Participatory Notes (P-Notes) are offshore derivative instruments linked to underlying Indian securities.
Historically, they were issued by SEBI-registered Foreign Institutional Investors (FIIs) to eligible overseas investors who wanted economic exposure to Indian securities without directly investing in those securities in the conventional manner.
The older FII terminology was later incorporated into the broader Foreign Portfolio Investor (FPI) framework. P-Notes are now generally discussed as Offshore Derivative Instruments (ODIs).
🔍 Explanation of Every Option
Foreign investor wants exposure to an Indian security → eligible registered foreign portfolio intermediary purchases or holds the underlying Indian security → an offshore instrument linked to that security is issued to the eligible overseas investor.
- FDI generally represents longer-term ownership interest and influence in an enterprise.
- Portfolio investment mainly involves investment in financial securities without the same type of controlling interest.
- P-Notes belong to the portfolio-investment/capital-market context.
- Concerns historically arose regarding transparency of the ultimate investor.
- They created concerns relating to regulatory arbitrage.
- Regulators therefore strengthened KYC, disclosure and reporting requirements.
- SEBI regulates the permissible issuance and reporting of ODIs/P-Notes.
- Who regulates India’s securities market? — SEBI.
- P-Notes are also known under the broader term Offshore Derivative Instruments.
- Difference between FDI and FPI.
- Difference between FII and the present FPI framework.
- Why P-Notes raise KYC and transparency concerns.
- Whether P-Notes are issued inside India or offshore.
- Whether the investor necessarily owns the underlying Indian security directly.
| Question | Remember This |
|---|---|
| Q67 | Mumbai — highest city population in Census 2011 among the options. |
| Q68 | RIL — highest-ranked Indian company in 2011 Forbes Global 2000. |
| Q69 | Old Nirmal Bharat Abhiyan → community toilets in urban slums under VAMBAY. |
| Q70 | PSB foreign-investment ceiling = 20%; no matching option → scrapped. |
| Q71 | Indira Awaas Yojana → rural housing → later PMAY-G. |
| Q72 | 13th Finance Commission grants = ₹3,18,581 crore. |
| Q73 | GDCF = Gross Domestic Saving + Net Capital Inflow. |
| Q74 | 2003 ethanol-blended petrol = E5 / 5%. |
| Q75 | NCP → Ministry of Health & Family Welfare; chaired by PM. |
| Q76 | Repo → RBI liquidity to banks; Gini 0 → perfect equality. |
| Q77 | S. S. Tarapore → Capital Account Convertibility. |
| Q78 | P-Notes → FIIs historically / FPIs under modern framework. |