Indian Economy PYQs topic-wise

Question 1

A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called: (A) Green Bond (B) Social Bond (C) Sustainability Bond (D) Sovereign Bond

Accepted Answer

(C) Sustainability Bond — UPSC provisional key: (C), Series A question 92. A sustainability bond dedicates its proceeds to a combination of green and social projects. The distinction concerns use of proceeds; it should not be confused with a sustainability-linked bond whose financial terms are tied to performance targets. Sources: [UPSC provisional answer key]() · [ICMA: Sustainability Bond Guidelines]() · [ICMA: sustainable-finance principles and bond types]()

Question 2

Which one of the following correctly represents the three key sub-indices of the Financial Inclusion Index (FI-Index) of the Reserve Bank of India (RBI)? (A) Credit access, Insurance depth, and Pension coverage (B) Banking access, GDP contribution, and Financial literacy (C) Access, Usage, and Quality (D) Access, Affordability, and Transparency

Accepted Answer

(C) Access, Usage, and Quality — UPSC provisional key: (C), Series A question 88. The FI-Index comprises Access, Usage and Quality, weighted 35%, 45% and 20% respectively. This separates whether people can obtain services from whether they actually use them and whether those services support informed, effective participation. Sources: [UPSC provisional answer key]() · [RBI Annual Report: financial inclusion and FI-Index weights]() · [PIB: FI-Index methodology and dimensions]()

Question 3

An e-commerce revenue model where the seller has control over pricing but doesn’t keep products in stock and instead transfers customer orders and shipment details to a third-party supplier, who then ships the goods directly to the customer, is called: (A) Dropshipping Model (B) Affiliate Revenue Model (C) Transaction Fee Revenue Model (D) Agency Revenue Model

Accepted Answer

(A) Dropshipping Model — UPSC provisional key: (A), Series A question 87. In dropshipping, the retailer sells at its chosen price while the supplier holds inventory and fulfils the order directly to the buyer. The retailer’s return comes from the selling-price margin after supplier and other costs, rather than a referral commission alone. Sources: [UPSC provisional answer key]() · [Shopify merchant documentation: dropshipping]() · [Shopify: affiliate marketing versus dropshipping]()

Question 4

Which of the following statements about Crowdfunding is/are correct?
1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
Select the answer using the code given below: (A) 1 only (B) 2 only (C) Both 1 and 2 (D) Neither 1 nor 2

Accepted Answer

(C) Both 1 and 2 — UPSC provisional key: (C), Series A question 97. Both statements reflect the definition and potential SME benefit described in SEBI’s crowdfunding consultation paper. Online aggregation can lower fundraising barriers, but simpler procedures do not mean no legal compliance, due diligence or risk; the consultation paper itself is not permission to conduct unrestricted public investment solicitation. Sources: [UPSC provisional answer key]() · [SEBI: Consultation Paper on Crowdfunding in India, sections 1, 2 and 4]()

Question 5

Which of the following statements about Real-World Assets (RWA) Tokenization are correct?
1. Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
2. Tokenization of real world assets offers 24 × 7 access, promoting financial inclusion.
3. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
Select the answer using the code given below: (A) 1, 2 and 3 (B) 2 and 3 only (C) 1 and 2 only (D) 1 and 3 only

Accepted Answer

(A) 1, 2 and 3 — UPSC provisional key: (A), Series A question 91. All three are accepted as descriptions of tokenisation and its potential benefits. Digital tokens can represent asset claims, permit fractional participation and support continuous trading; access to high-growth opportunities is a possibility, not a guarantee of returns, liquidity or legal availability to every Indian investor. Sources: [UPSC provisional answer key]() · [BIS: tokenisation continuum and legal/economic challenges]() · [BIS Annual Economic Report 2025: tokenised markets and 24/7 potential]()

Question 6

Which one of the following best describes the key objective of India’s ‘Open Network for Digital Commerce’ (ONDC) initiative? (A) To allow government control over all digital commerce transactions (B) To replace private e-commerce players (C) To break the dominance of large e-commerce platforms by enabling interoperability across networks (D) To mandate UPI-based payments for all online transactions

Accepted Answer

(C) To break the dominance of large e-commerce platforms by enabling interoperability across networks — UPSC provisional key: (C), Series A question 89. ONDC uses open-network interoperability to widen market access and reduce dependence on large, closed platforms. A buyer on one participating application can discover and transact with sellers connected through other applications, subject to network arrangements. Sources: [UPSC provisional answer key]() · [ONDC: purpose, open-network infrastructure and platform dependency]()

Question 7

Which one of the following best describes the ‘Crowding Out Effect’ in the context of fiscal policy? (A) A situation where private investment increases due to increased Government spending (B) A situation where Government borrowing leads to higher interest rates, which reduces private investment (C) A situation where an increase in taxes leads to increased private sector investment (D) A situation where Government spending has no impact on aggregate demand

Accepted Answer

(B) A situation where Government borrowing leads to higher interest rates, which reduces private investment — UPSC provisional key: (B), Series A question 94. Government borrowing can increase demand for available funds and push interest rates upward, making some private investments less attractive. This is the conventional financial crowding-out mechanism; its strength depends on economic slack, monetary conditions and access to finance. Sources: [UPSC provisional answer key]() · [IMF: fiscal stance and crowding out through borrowing]() · [IMF: Fiscal Policy, Taking and Giving Away]()

Question 8

With reference to different Committees in India, consider the following details:
1. Committee: R.N. Malhotra Committee; Objective: Comprehensive reforms of Insurance sector in India; Organization under which it was formed: Insurance Regulatory and Development Authority of India
2. Committee: L.C. Gupta Committee; Objective: Preparing a roadmap for the introduction of derivatives trading in India; Organization under which it was formed: Securities and Exchange Board of India
3. Committee: Urjit R. Patel Committee; Objective: Preparing a roadmap for reforming bank lending to the Housing sector; Organization under which it was formed: Reserve Bank of India
4. Committee: Y.H. Malegam Committee; Objective: Preparing a roadmap for reforms in Microfinance sector in India; Organization under which it was formed: Reserve Bank of India

In which of the above rows are all the details correctly matched? (A) 2 only (B) 2 and 3 (C) 1, 3 and 4 (D) 2 and 4

Accepted Answer

(D) 2 and 4 — UPSC provisional key: (D), Series A question 98. Rows 2 and 4 are fully matched: L.C. Gupta–SEBI–derivatives and Y.H. Malegam–RBI–microfinance. Malhotra’s committee was set up by the government in 1993, and Urjit Patel’s RBI committee reviewed the monetary-policy framework. Sources: [UPSC provisional answer key]() · [SEBI: appointment and mandate of L.C. Gupta Committee]() · [IRDAI: insurance reform history and Malhotra Committee]() · [Economic Survey 2013–14: Urjit Patel Committee remit]() · [Rajya Sabha: Malegam Committee report to RBI on microfinance]()

Question 9

Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India:
1. NBFCs cannot accept demand deposits.
2. All the NBFCs operating in India have to be registered with the RBI.
3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself.
4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs.
Which of the statements given above is/are correct? (A) 1 and 4 (B) 1, 2 and 3 (C) 4 only (D) 2, 3 and 4

Accepted Answer

(A) 1 and 4 — UPSC provisional key: (A), Series A question 99. Statements 1 and 4 are correct: NBFCs cannot accept demand deposits, and their deposits are not protected by DICGC insurance. Statement 2 ignores registration exemptions for specified categories, while statement 3 incorrectly gives NBFCs the bank-like ability to issue cheques drawn on themselves. Sources: [UPSC provisional answer key]() · [RBI: All You Wanted to Know about NBFCs, questions 3–4]() · [RBI: NBFC deposits are not insured by DICGC]()

Question 10

Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct? (A) UPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency. (B) In case of UPI, settlement for end users happens instantly as the money gets immediately debited or credited but in case of Digital Rupee, there is no settlement as the wallet balance gets transferred to another wallet. (C) UPI transactions are recorded by banks and reflected in bank statements but in case of Digital Rupee, no data is captured in bank statements as transactions are from one wallet to another. (D) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.

Accepted Answer

(D) In both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks. — UPSC provisional key: (D), Series A question 90. This is the incorrect statement: bank deposits used for ordinary UPI payments are liabilities of the commercial bank, whereas e₹ is a liability of the Reserve Bank of India. The fact that a bank or another provider supplies a wallet does not make that provider the issuer of the currency. Sources: [UPSC provisional answer key]() · [RBI: Digital Rupee FAQs, 9 January 2025]()

Question 11

Consider the following statements about Multidimensional Poverty Index (MPI):
1. MPI is calculated using Alkire-Foster methodology.
2. MPI calculated by NITI Aayog has a total of twelve indicators.
3. Maternal Health and Bank Account are common indicators in the MPI of NITI Aayog and MPI of United Nations Development Programme (UNDP).
Which of the statements given above is/are correct? (A) 1 and 2 only (B) 1, 2 and 3 (C) 1 and 3 only (D) 2 only

Accepted Answer

(A) 1 and 2 only — UPSC provisional key: (A), Series A question 100. Both MPIs use the Alkire–Foster approach, and India’s national MPI has 12 indicators across health, education and living standards. Maternal Health and Bank Account are India-specific additions to the global framework’s ten indicators, so statement 3 is false. Sources: [UPSC provisional answer key]() · [NITI Aayog: National Multidimensional Poverty Index, Progress Review 2023]() · [NITI Aayog: National MPI Baseline Report, methodology]()

Question 12

Which of the following statements about M1xchange’s role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct?
1. M1xchange provides collateral based loans to MSMEs.
2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs.
3. M1xchange functions as a credit rating agency for MSMEs.
Select the answer using the code given below: (A) 1, 2 and 3 (B) 2 only (C) 2 and 3 only (D) 1 only

Accepted Answer

(B) 2 only — UPSC provisional key: (B), Series A question 93. Only statement 2 is correct: M1xchange connects MSME sellers, buyers and financiers so accepted invoices or bills can be discounted. The MSME receives earlier payment at a discount, with financing based on the receivable; operating that market does not make the platform a credit-rating agency. Sources: [UPSC provisional answer key]() · [M1xchange: TReDS FAQs and participants]() · [M1xchange: factoring and collateral-free receivables financing]()

Question 13

Which among the following is/are the objective(s) of the Rainfed Area Development (RAD) initiative under the National Mission for Sustainable Agriculture (NMSA)?
1. Encouraging monoculture in rainfed areas
2. Increasing rice cultivation in irrigated regions
3. Enhancing productivity and minimising climatic risks through Integrated Farming Systems (IFS)
Select the answer using the code given below: (A) 1 only (B) 1 and 2 (C) 2 and 3 (D) 3 only

Accepted Answer

(D) 3 only — UPSC provisional key: (D), Series A question 28. RAD promotes Integrated Farming Systems to raise productivity and spread climatic and livelihood risks. Crops can be combined with horticulture, livestock, fisheries, beekeeping or other suitable activities. Multiple income and resource-use pathways can cushion losses in one enterprise; that is why statement 3 fits and monoculture does not. Sources: [UPSC provisional answer key]() · [Ministry of Agriculture/PIB — NMSA and RAD objectives]() · [Ministry of Agriculture/PIB — Support for Mixed Farming,2025]()

Question 14

Which of the following statements about insurance in aviation sector is/are correct?
1. ‘Aviation Hull Insurance’ covers the physical aircraft, including the body, engine, and on-board equipment.
2. Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault.
Select the answer using the code given below: (A) 1 only (B) 2 only (C) Both 1 and 2 (D) Neither 1 nor 2

Accepted Answer

(C) Both 1 and 2 — UPSC provisional key: (C), Series A question 96. Both statements are accepted: hull insurance covers insured physical aircraft loss, and Montreal provides a no-fault first tier for covered passenger death or injury. Under the limits effective 28 December 2024 that tier is 151,880 SDR per passenger; above it specified carrier defences apply, and treaty scope and contributory-negligence rules still matter. Sources: [UPSC provisional answer key]() · [New India Assurance: Aviation Hull All-Risk Insurance]() · [ICAO: Montreal Convention 1999 legal workshop, liability and defences]() · [ICAO: revised limits effective 28 December 2024]()

Question 15

Consider the following statements :
Statement I :
In India, State Governments have no power for making rules for grant of concessions in respect of extraction of minor minerals even though such minerals are located in their territories.
Statement II :
In India, the Central Government has the power to notify minor minerals under the relevant law.
Which one of the following is correct in respect of the above statements? (A) Both Statement I and Statement II are correct and Statement II explains Statement I (B) Both Statement I and Statement II are correct but Statement II does not explain Statement I (C) Statement I is correct but Statement II is not correct (D) Statement I is not correct but Statement II is correct

Accepted Answer

(D) Statement I is not correct but Statement II is correct — Correct. Section 15 empowers State Governments to make rules for minor mineral concessions, so Statement I is incorrect. Section 3(e) gives the Central Government notification power, so Statement II is correct.

Question 16

Consider the following statements :
Statement I :
As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II :
Bondholders are lenders to a company whereas stockholders are its owners.
Statement III :
For repayment purpose, bondholders are prioritized over stockholders by a company.
Which one of the following is correct in respect of the above statements? (A) Both Statement II and Statement III are correct and both of them explain Statement I (B) Both Statement I and Statement II are correct and Statement I explains Statement II (C) Only one of the Statements II and III is correct and that explains Statement I (D) Neither Statement II nor Statement III is correct

Accepted Answer

(A) Both Statement II and Statement III are correct and both of them explain Statement I — Correct. Bondholders lend to the company, while shareholders own equity. Creditors also have priority over shareholders for repayment. Both Statements II and III explain the relatively lower risk in Statement I.

Question 17

How many of the following countries among UAE, France, Germany, Singapore and Bangladesh currently accept international merchant payments under UPI?  (A) Only two (B) Only three (C) Only four (D) All five

Accepted Answer

(B) Only three — Correct. UAE, France and Singapore are the three among the listed countries where international merchant payments through UPI have been enabled.

Question 18

With reference to critical minerals, consider the following statements:
1. India has joined the Minerals Security Partnership.
2. India is resource-rich in all critical minerals identified by the Government.
3. The MMDR Act was amended in 2023 to facilitate greater central involvement in auction of certain critical mineral blocks.
Which of the statements given above are correct? (A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

Accepted Answer

(C) 1 and 3 only — Correct. India joined the Minerals Security Partnership, and the 2023 amendments were meant to accelerate exploration and auction of critical minerals.

Question 19

Consider the following statements:
1. Revenue deficit is the excess of revenue expenditure over revenue receipts.
2. Fiscal deficit includes borrowings as a financing item, not as a receipt that reduces the deficit.
3. Primary deficit is fiscal deficit minus interest payments.
Which of the statements given above are correct? (A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

Accepted Answer

(D) 1, 2 and 3 — Correct. Revenue deficit compares revenue accounts, fiscal deficit measures total borrowing requirement, and primary deficit removes interest payments from fiscal deficit.

Question 20

If the fiscal deficit is Rs. 50,000 crore and interest payments are Rs. 1,500 crore, the primary deficit will be: (A) Rs. 48,500 crore (B) Rs. 50,000 crore (C) Rs. 51,500 crore (D) Rs. 58,500 crore

Accepted Answer

(A) Rs. 48,500 crore — Correct. Primary deficit equals fiscal deficit minus interest payments, so 50,000 minus 1,500 equals 48,500 crore.

Question 21

Consider the following statements regarding turmeric in India:
1. India is among the leading producers of turmeric in the world.
2. Turmeric has important culinary and medicinal uses.
3. It is entirely a temperate crop grown only in Himalayan regions.
Which of the statements given above is/are correct? (A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

Accepted Answer

(A) 1 and 2 only — Correct. India is a major turmeric producer and the crop has wide culinary and medicinal significance. Statement 3 is incorrect.

Question 22

Consider the following statements:
1. Capital receipts either create a liability or reduce the assets of the Government.
2. Borrowings and disinvestment proceeds are capital receipts.
3. Interest received on loans by the Government creates a liability of the Government.
Which of the statements given above is/are correct? (A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

Accepted Answer

(A) 1 and 2 only — Correct. Capital receipts either create liabilities, like borrowings, or reduce assets, like recovery of loans or disinvestment. Interest received on loans is a revenue receipt and does not create a liability.

Question 23

With reference to the income-tax provisions regarding agricultural income, consider the following statements:
Statement I: Income from allied agricultural activities like poultry farming is exempted from tax.
Statement II: Rural agricultural land is not considered a capital asset under the Income-tax Act, 1961.
Which one of the following is correct? (A) Both statements are correct and Statement II explains Statement I (B) Both statements are correct but Statement II does not explain Statement I (C) Statement I is correct but Statement II is incorrect (D) Statement I is incorrect but Statement II is correct

Accepted Answer

(D) Statement I is incorrect but Statement II is correct — Correct. Poultry farming income is taxable as it is not agricultural income. However, rural agricultural land is indeed not treated as a capital asset under the Income-tax Act.

Question 24

If fiscal deficit is Rs. 50,000 crore and interest liabilities are Rs. 1,500 crore, the gross primary deficit is: (A) Rs. 48,500 crore (B) Rs. 51,500 crore (C) Rs. 58,500 crore (D) Rs. 60,000 crore

Accepted Answer

(A) Rs. 48,500 crore — Correct. Primary deficit is obtained by subtracting interest payments from fiscal deficit. Therefore, 50,000 - 1,500 = Rs. 48,500 crore.

Question 25

The PM Surya Ghar Muft Bijli Yojana aims to:
1. Install rooftop solar panels on residential households.
2. Provide free electricity of up to 300 units per month to eligible households.
3. Create skilled manpower for the solar energy sector.
Which of the statements given above are correct? (A) 1 and 2 only (B) 2 and 3 only (C) 1 and 3 only (D) 1, 2 and 3

Accepted Answer

(D) 1, 2 and 3 — Correct. The scheme targets rooftop solar installation, provision of free electricity up to 300 units per month, and skilling and upskilling for the solar sector.

Topic	PYQs	Last asked
Basic Concepts of Economics	16	2023
National Income Accounting	7	2016
Growth & Development	16	2017
Planning in India	14	2019
Fiscal Policy & Budgeting	37	2026
Monetary Policy & Banking	47	2025
Banking System	51	2026
Financial Markets	35	2026
Inflation & Price Indices	14	2022
External Sector & Trade	31	2022
International Economic Organizations	33	2025
Agriculture	40	2026
Industry & Infrastructure	40	2026
Poverty & Unemployment	27	2026
Money & Capital Markets	19	2025
Public Finance & Taxation	37	2025
Economic Reforms since 1991	17	2024
Sustainable Development	8	2025

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