17 Multiple-Choice Questions (MCQs) on Rural Economy in India

Test your knowledge with 17 MCQs on India's Rural Economy, covering its evolution from Pre-Colonial, Colonial, Post-Colonial to the Liberal Economy. Includes answers and explanations!

1. What is a key characteristic of India’s rural economy?

a) Industrial dominance
b) Agriculture-based livelihood
c) High urbanization
d) Primarily service sector jobs

✅ Answer: b) Agriculture-based livelihood
💡 Explanation: The Indian rural economy is largely dependent on agriculture, with over 60% of the population engaged in farming and allied activities.

2. Which economic system primarily defined India’s Pre-Colonial Rural Economy?

a) Capitalist economy
b) Self-sufficient village economy
c) Industrialized economy
d) Socialist economy

✅ Answer: b) Self-sufficient village economy
💡 Explanation: Before colonial rule, Indian villages were largely self-sufficient, producing their own food, textiles, and other necessities with minimal external dependence.

3. What was the major impact of British colonial rule on India’s rural economy?

a) Strengthening of village industries
b) Introduction of mechanized farming
c) Commercialization of agriculture and land revenue policies
d) Strengthening of the barter system

✅ Answer: c) Commercialization of agriculture and land revenue policies
💡 Explanation: The British introduced revenue systems like Zamindari, Ryotwari, and Mahalwari, which led to land alienation, increased taxes, and the exploitation of farmers.

4. Which of the following land revenue systems was introduced by the British in Bengal?

a) Ryotwari
b) Mahalwari
c) Zamindari
d) Permanent Settlement

✅ Answer: d) Permanent Settlement
💡 Explanation: Introduced in 1793 by Lord Cornwallis, the Permanent Settlement (Zamindari System) fixed land revenue permanently, making landlords responsible for tax collection.

5. Which feature was lost in India’s rural economy during British rule?

a) Growth of cottage industries
b) Self-sufficiency of villages
c) Increase in agricultural productivity
d) Strengthening of rural cooperatives

✅ Answer: b) Self-sufficiency of villages
💡 Explanation: British policies led to rural distress by dismantling traditional industries and forcing peasants into cash crop production for export.

6. What was the major focus of rural economic policies in Post-Colonial India?

a) Industrialization in villages
b) Green Revolution and Land Reforms
c) Expansion of colonial land revenue system
d) Complete privatization of rural resources

✅ Answer: b) Green Revolution and Land Reforms
💡 Explanation: After independence, India focused on land reforms, cooperative farming, and Green Revolution policies to improve agricultural productivity.

7. Which plan focused on rural development through community programs?

a) First Five-Year Plan
b) Third Five-Year Plan
c) Tenth Five-Year Plan
d) Twelfth Five-Year Plan

✅ Answer: a) First Five-Year Plan
💡 Explanation: The First Five-Year Plan (1951-56) emphasized community development programs to uplift rural areas.

8. What was the main aim of the Green Revolution?

a) Reducing land inequality
b) Increasing industrial production
c) Enhancing food grain production through HYVs
d) Expanding trade routes

✅ Answer: c) Enhancing food grain production through HYVs
💡 Explanation: The Green Revolution (1960s) introduced High-Yielding Varieties (HYVs) of seeds, irrigation, and chemical fertilizers to boost agricultural productivity.

9. Which institution was established to finance rural credit in India?

a) SEBI
b) NABARD
c) IRDAI
d) EXIM Bank

✅ Answer: b) NABARD
💡 Explanation: NABARD (National Bank for Agriculture and Rural Development) was established in 1982 to provide credit and financial support for rural development.

10. What is a major feature of India’s post-liberalization rural economy?

a) Complete reliance on agriculture
b) Decline of private sector investment
c) Growth of rural non-farm employment
d) Expansion of British-era land policies

✅ Answer: c) Growth of rural non-farm employment
💡 Explanation: Post-liberalization (1991), India witnessed growth in rural industries, microfinance, and rural entrepreneurship, reducing dependence on agriculture.

11. Liberalization policies in 1991 had what impact on the rural economy?

a) Increased government control
b) Encouraged foreign investment in rural sectors
c) Strengthened traditional farming techniques
d) Removed private sector involvement

✅ Answer: b) Encouraged foreign investment in rural sectors
💡 Explanation: Economic liberalization allowed private investment in agriculture, agro-processing, and rural industries.

12. What does the MGNREGA scheme aim to provide?

a) Free electricity to farmers
b) Guaranteed employment for rural households
c) Subsidies on chemical fertilizers
d) Urban housing for migrants

✅ Answer: b) Guaranteed employment for rural households
💡 Explanation: The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005 provides 100 days of wage employment to rural households.

13. Which factor contributed significantly to rural-to-urban migration in India?

a) Growth of village self-sufficiency
b) Industrialization and lack of rural employment
c) Expansion of cooperative farming
d) Strengthening of the Zamindari system

✅ Answer: b) Industrialization and lack of rural employment
💡 Explanation: Low rural employment and urban job opportunities have driven large-scale rural-to-urban migration.

14. What percentage of India’s population lives in rural areas (as per Census 2011)?

a) 50%
b) 69%
c) 85%
d) 30%

✅ Answer: b) 69%
💡 Explanation: According to Census 2011, about 69% of India's population resides in rural areas.

15. Which agricultural policy encouraged contract farming in India?

a) Green Revolution
b) Agricultural Price Policy
c) Model APMC Act 2003
d) Zamindari Abolition Act

✅ Answer: c) Model APMC Act 2003
💡 Explanation: The Model Agricultural Produce Market Committee (APMC) Act 2003 facilitated contract farming and direct procurement from farmers.

16. The rural cooperative credit system in India was first recommended by:

a) Mahatma Gandhi
b) Balwant Rai Mehta Committee
c) All India Rural Credit Survey Committee (1954)
d) RBI

✅ Answer: c) All India Rural Credit Survey Committee (1954)
💡 Explanation: This committee played a crucial role in structuring India's cooperative banking system.

17. What is the major issue in India’s rural economy today?

a) Declining urbanization
b) Land fragmentation and farmer distress
c) Decline in industrial productivity
d) Surplus rural employment

✅ Answer: b) Land fragmentation and farmer distress
💡 Explanation: Small landholdings, low incomes, and climate change have led to agrarian distress.