Practice Test 14

The Indian economy is one of the fastest-growing major economies in the world and has consistently maintained a robust growth trajectory over the past three decades despite periodic global and domestic challenges. The economic liberalisation initiated in 1991 dismantled the elaborate system of industrial licensing, import restrictions, and state control over investment decisions that had characterised the mixed economy model of the pre-reform era, opening the country to foreign investment, international competition, and market forces that drove efficiency, innovation, and structural transformation. India's Gross Domestic Product, measured at current prices, has grown from a modest base at the time of independence to several hundred lakh crore rupees today, making the country the fifth largest economy in the world and one that is projected to become the third largest within this decade on the basis of current growth rates. The Make in India initiative, launched in September 2014, aims to transform India into a global manufacturing hub by improving the ease of doing business, developing world-class infrastructure, attracting foreign direct investment, and building domestic industrial capacity across twenty-five designated sectors ranging from automobiles and electronics to defence equipment, pharmaceuticals, and renewable energy. The Production Linked Incentive scheme, providing financial incentives to manufacturers who achieve specified increments in production from a base year, has attracted significant investment in sectors including mobile phones, semiconductors, pharmaceuticals, medical devices, food processing, textiles, and specialty steel, creating new manufacturing capacity and jobs. India's services sector, encompassing information technology, business process outsourcing, banking and financial services, telecommunications, retail, and tourism, accounts for over half of the national income and employs hundreds of millions of people, with India's technology companies having established a globally recognised competitive position in software development, systems integration, and digital services. The startup ecosystem has flourished, with India now being home to the third largest number of technology startups in the world, numerous unicorn companies valued at over one billion dollars, and a vibrant venture capital industry that channels both domestic and foreign investment into high-growth technology-driven enterprises. Infrastructure investment at an unprecedented scale, including the PM Gati Shakti National Master Plan that coordinates infrastructure projects across ministries to create multimodal logistics networks, is addressing the infrastructure deficit that has historically constrained India's growth potential. The National Monetisation Pipeline seeks to unlock the value of public sector infrastructure assets by involving private partners in their operation and management while retaining public ownership, generating resources for new capital investment. The Goods and Services Tax has unified the domestic market, reduced the cascading effect of multiple indirect taxes, and simplified compliance for businesses operating across state boundaries. The formal sector of the economy has expanded as a result of the combined effect of the Goods and Services Tax, demonetisation, and digital payment adoption, with more businesses and workers entering the formal regulatory and financial system and contributing to social security programmes and the tax base. India's foreign exchange reserves have reached record levels, providing a substantial buffer against external shocks and supporting the credibility of the rupee in international currency markets.