Indian Economy — UPSC Prelims PYQs

Question 1

With reference to minor minerals in India, which one of the following statements is correct? (A) Only the Central Government can notify minor minerals and regulate their extraction (B) Minor minerals are outside the purview of the MMDR Act (C) Sand cannot be treated as a minor mineral (D) State Governments play a major role in regulating minor minerals

Accepted Answer

(D) State Governments play a major role in regulating minor minerals — Correct. State Governments are central to administration, concession and regulation of minor minerals subject to the legal framework.

Question 2

Consider the following statements:
1. Bondholders are lenders to a company while stockholders are owners.
2. In case of repayment, bondholders generally rank ahead of stockholders.
Which of the above best explains why bondholders are usually at relatively lower risk than stockholders? (A) Both 1 and 2 explain it (B) Only 1 explains it (C) Only 2 explains it (D) Neither 1 nor 2 explains it

Accepted Answer

(A) Both 1 and 2 explain it — Correct. Bondholders have creditor status and repayment priority, which is why they are generally lower-risk than equity holders.

Question 3

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 4

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 5

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 6

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 7

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 8

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 9

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 10

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 11

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.

Question 12

With reference to payment systems in India, consider the following statements:
1. In RTGS, fund settlement is done individually and in real time.
2. In NEFT, settlement is deferred and done in batches.
3. Banks are allowed to charge inward RTGS transactions to customers.
Which of the statements given above are correct? (A) 1 and 2 only (B) 1 and 3 only (C) 2 and 3 only (D) 1, 2 and 3

Accepted Answer

(A) 1 and 2 only — Correct. RTGS is real-time gross settlement and NEFT works through deferred net settlement batches; Statement 3 is wrong because inward RTGS transactions are not charged to customers.

Question 13

With reference to BRSR (Business Responsibility and Sustainability Reporting), consider the following statements:
1. RBI mandates all listed companies to file BRSR.
2. BRSR disclosures are largely non-financial in nature.
Which of the statements given above is/are correct? (A) 1 only (B) 2 only (C) Both 1 and 2 (D) Neither 1 nor 2

Accepted Answer

(B) 2 only — Correct. Sustainability reporting covers non-financial disclosures such as environmental, social and governance practices.

Question 14

Consider the following statements about the 15th Finance Commission:
1. It recommended 41% vertical devolution of the divisible pool to States.
2. It used demographic performance and forest & ecology among its criteria.
3. It recommended performance-based incentives for certain reforms.
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 15th Finance Commission recommended 41% vertical devolution, used criteria such as demographic performance and forest & ecology, and proposed performance-linked grants and incentives.

Question 15

Which one of the following best describes the core function of the World Bank Group's International Bank for Reconstruction and Development (IBRD)? (A) Providing grants only to the poorest countries with no lending operations (B) Providing loans and guarantees mainly to middle-income and creditworthy lower-income countries for development purposes (C) Managing the global foreign exchange market on a day-to-day basis (D) Setting binding tariff rates for WTO members

Accepted Answer

(B) Providing loans and guarantees mainly to middle-income and creditworthy lower-income countries for development purposes — Correct. IBRD lends to middle-income and creditworthy borrowers and traces its roots to post-war reconstruction and long-term development finance.

Question 16

With reference to investments, consider the following: Bonds, Hedge Funds, Stocks and Venture Capital. How many of the above are treated as Alternative Investment Funds? (A) Only one (B) Only two (C) Only three (D) All four

Accepted Answer

(B) Only two — Correct. Hedge funds and venture capital are treated as Alternative Investment Funds, whereas plain bonds and stocks are not.

Question 17

Which of the following best describes a capital receipt of the Government? (A) It neither creates a liability nor reduces an asset (B) It creates a liability or reduces an asset (C) It is always non-tax revenue (D) It is always credited to the Public Account

Accepted Answer

(B) It creates a liability or reduces an asset — Correct. Capital receipts either create liabilities such as borrowings or reduce assets such as disinvestment proceeds and loan recoveries.

Question 18

Consider the following statements about circular economy:
1. It aims to reduce raw material use.
2. It seeks to reduce production waste.
3. It can help reduce greenhouse gas emissions.
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. Circular economy emphasizes reuse, repair, recycling and resource efficiency, which reduce raw material extraction, waste and emissions.

Question 19

Consider the following statements regarding Rashtriya Gokul Mission:
1. It aims at development and conservation of indigenous bovine breeds.
2. It is linked with improving productivity and livelihood opportunities in the rural economy.
3. It is exclusively a marine fisheries programme.
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. Rashtriya Gokul Mission focuses on indigenous cattle development and rural livelihood support, not marine fisheries.

Question 20

Which of the following are sources of income for the Reserve Bank of India?
1. Buying and selling government securities
2. Buying and selling foreign currency
3. Printing and distributing currency notes
Select the correct answer using the code given below: (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 — This is incomplete because the RBI also earns through foreign exchange operations in addition to government securities transactions.

Question 21

Which of the following statements about PM Surya Ghar Muft Bijli Yojana is correct? (A) It targets rooftop solar adoption at the household level (B) It is a scheme for coal mine rehabilitation (C) It is a programme to expand diesel gensets in villages (D) It is unrelated to renewable energy

Accepted Answer

(A) It targets rooftop solar adoption at the household level — Correct. The scheme promotes rooftop solar for households and supports adoption, implementation and related skilling.

Question 22

Which of the following activities fall within the regulatory domain of the Petroleum and Natural Gas Regulatory Board (PNGRB)?
1. Authorizing city gas distribution networks
2. Regulating downstream petroleum and natural gas pipelines
3. Awarding offshore exploration blocks in deep sea areas
Select the correct answer using the code given below: (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. PNGRB regulates downstream petroleum and natural gas activities such as pipelines and city gas distribution, but not upstream exploration block allocation.

Question 23

With reference to India's equity options market, consider the following statements:
1. India accounts for a very large share of global equity options trading volume.
2. India's stock market capitalization has grown rapidly in recent years.
3. There is no regulatory body in India that cautions small investors about derivatives risk.
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

(A) 1 and 2 only — Correct. The first two statements are broadly correct, while Statement 3 is wrong because SEBI repeatedly warns investors about derivatives risks.

Question 24

Consider the following statements about the International Bank for Reconstruction and Development (IBRD):
1. It provides loans and guarantees primarily to middle-income countries.
2. It works single-handedly as the only multilateral institution for poverty reduction.
3. It was originally established to help Europe rebuild after the Second World War.
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. The IBRD lends mainly to middle-income and creditworthy lower-middle-income countries, and it was created in 1944 to support post-war reconstruction in Europe.

Question 25

Revenue expenditure of a government is Rs. 80,000 crore, revenue receipts are Rs. 60,000 crore, borrowings are Rs. 10,000 crore, and interest payments are Rs. 6,000 crore. Consider the following statements:
1. Revenue deficit is Rs. 20,000 crore.
2. Fiscal deficit is Rs. 10,000 crore.
3. Primary deficit is Rs. 4,000 crore.
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 = 80,000 - 60,000 = 20,000 crore. Fiscal deficit is reflected by the borrowing requirement of Rs. 10,000 crore, and primary deficit = fiscal deficit - interest payments = 10,000 - 6,000 = Rs. 4,000 crore.

Indian Economy — UPSC Prelims PYQs

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Indian Economy — UPSC Prelims PYQs

Indian Economy PYQs by year

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Practise all Indian Economy PYQs