Test: Weekly Current Affairs: May 8th to 14th - UPSC MCQ

1. Gross Non-Performing Assets (NPAs) in 2025 - 16%: Correctly matched. The gross NPAs in India's microfinance sector were reported to have surged to 16% by March 2025, indicating a significant crisis.
2. Over-Leveraging of Borrowers - Borrowers taking loans from a single source: Incorrectly matched. The issue of over-leveraging in the microfinance sector arises from borrowers taking loans from multiple sources, not a single source. This over-borrowing from various lenders contributes to the financial strain on borrowers.
3. Regulatory Pressure - Stricter norms by the Reserve Bank of India (RBI): Correctly matched. The RBI has implemented stricter norms to stabilize the sector, leading to increased regulatory pressure and short-term liquidity challenges for MFIs.
4. Importance of Microfinance - Promotes gender equality through financial empowerment of women: Correctly matched. Microfinance plays a crucial role in promoting gender equality by providing financial resources and empowerment opportunities to women, enabling them to contribute to socio-economic development.
Thus, three pairs are correctly matched: 1, 3, and 4.

Digital Banking Units (DBUs) face significant challenges primarily due to low digital adoption rates and high operational costs. Many DBUs were established without adequate consideration of local needs, leading to ineffective planning. Additionally, the high costs associated with maintaining infrastructure in low-traffic areas further deter their expansion. It is crucial to enhance financial literacy and connectivity in remote regions to improve the effectiveness of DBUs. Interestingly, initiatives aimed at boosting digital literacy can potentially transform these units into vital resources for financial inclusion.

- Statement 1: This statement is incorrect. According to the World Economic Outlook Report 2025, India's growth forecast has been adjusted slightly downwards from 6.5% to 6.2%. Despite this slight revision, India remains the fastest-growing major economy globally.

- Statement 2: This statement is correct. The report highlights that significant investments in infrastructure and digitalization are indeed contributing to enhancing productivity and job creation, which are critical factors in India's economic resilience.

- Statement 3: This statement is incorrect. India's debt-to-GDP ratio for FY25 is 56.8%, which is significantly lower than that of the United States, which stands at 124.0%. This lower ratio supports India's economic stability rather than posing challenges.

Hence, only statement 2 is correct, making Option C the right answer.

1. Projected GDP Growth for 2025: 6.2% - This pair is correctly matched. The IMF projects India's GDP growth at 6.2% for 2025.

2. Foreign Exchange Reserves in May 2025: USD 688.13 billion - This pair is correctly matched. The foreign exchange reserves indeed reached USD 688.13 billion in May 2025.

3. Number of Operational Airports in 2025: 100 - This pair is incorrectly matched. The number of operational airports in 2025 was 159, not 100.

4. Overall Unemployment Rate in 2024: 5.5% - This pair is incorrectly matched. The overall unemployment rate improved slightly to 4.9% in 2024.

Thus, two pairs are correctly matched: the projected GDP growth for 2025 and the foreign exchange reserves in May 2025.

1. Northern Sea Route (NSR) - Russia

- Correct. The Northern Sea Route is primarily a shipping route that runs along the Russian Arctic coast from the Kara Sea, along Siberia, to the Bering Strait. It is managed and heavily utilized by Russia.

2. Himadri Research Station - Svalbard, Norway

- Correct. Himadri is India's first Arctic research station, located in the Svalbard archipelago of Norway. It is managed by the National Centre for Polar and Ocean Research (NCPOR).

3. Bhakra Nangal Dam - Yamuna River

- Incorrect. The Bhakra Nangal Dam is actually located on the Satluj River, not the Yamuna River. It is a prominent dam in northern India and is crucial for water and power supply in the region.

4. Satluj-Yamuna Link (SYL) Canal - Haryana and Punjab

- Correct. The Satluj-Yamuna Link canal is a proposed canal intended to connect the Satluj River to the Yamuna River, facilitating water sharing between Haryana and Punjab, among other states.

The correctly matched pairs are 1, 2, and 4. Therefore, only two pairs are correctly matched. Hence, the correct answer is Option B: Only two pairs.

Statement-I suggests that the surge in non-performing assets among Microfinance Institutions indeed reflects deeper structural issues in India's rural credit delivery model. This is corroborated by the fact that the text highlights the rise in defaults, regulatory pressures, over-leveraging of borrowers, and issues with the Joint Liability Group model, all pointing to structural concerns within the microfinance sector.
Statement-II provides relevant background information about microfinance, emphasizing its role in providing financial services to underserved populations, especially in rural areas, and its impact on empowering marginalized communities and promoting socio-economic development. This statement supports Statement-I by contextualizing the significance of microfinance in the broader discussion of rural credit delivery models in India. Thus, both statements are correct, and Statement-II explains the underlying principles and functions of microfinance that contribute to the structural issues highlighted in Statement-I.

Statement-I is correct as Digital Banking Units (DBUs) indeed aim to enhance financial inclusion by providing digital banking services in remote areas. Statement-II is also correct as DBUs have faced challenges such as high operational costs and low digital adoption rates. The challenges mentioned in Statement-II provide an explanation for why the goal mentioned in Statement-I might face hurdles, making (a) the correct answer.

The "6% GDP growth trap" in India is largely attributed to low investment and job creation, where the investment-to-GDP ratio has significantly declined in recent years. This stagnation prevents the economy from achieving higher growth rates necessary for substantial poverty alleviation and middle-class expansion. Additionally, the fiscal constraints faced by the government limit its ability to invest in growth-promoting sectors. A noteworthy point is that a sustained growth rate of over 8% is crucial for lifting a larger segment of the population into the middle class.

- Statement 1 is correct. The gross non-performing assets (NPAs) in India's microfinance institutions (MFIs) indeed rose to 16% by March 2025, which is nearly double the 8.8% recorded in 2024. This indicates a significant increase in defaults, signaling a potential crisis in the sector.

- Statement 2 is incorrect. The effectiveness of the Joint Liability Group (JLG) model has actually been declining due to changing borrower demographics and increased individual defaults, not becoming more effective. This weakening of the JLG model is contributing to the rising NPAs in the sector.

- Statement 3 is correct. The Reserve Bank of India (RBI) has introduced stricter norms to stabilize the microfinance sector. These regulations have led to short-term liquidity challenges for MFIs as they adapt to the new requirements.

Thus, the correct answer is Option B: 1 and 3 Only. This accurately reflects the current challenges faced by MFIs in India, including rising NPAs and regulatory pressures affecting liquidity.

By March 2025, the NPAs of microfinance institutions in India surged to 16%, indicating a significant rise in defaults among borrowers. This dramatic increase nearly doubled from 8.8% in the previous year, highlighting ongoing challenges within the sector. The surge is often attributed to economic factors, over-leveraging of borrowers, and increasing regulatory pressures. Interestingly, MFIs typically experience such crises every 3-5 years due to cyclical economic patterns, suggesting a need for sustainable financial practices.

The Tapti Basin Mega Recharge Project primarily focuses on maximizing the utilization of river water for irrigation across Madhya Pradesh and Maharashtra. This initiative aims to address water scarcity issues in the region and enhance agricultural productivity through improved irrigation practices.

Technological innovation plays a pivotal role in shaping India's economic resilience by boosting productivity and creating new job opportunities. The adoption of digital technologies not only enhances efficiency but also fosters growth across various sectors, contributing significantly to India's economic development.

1. Statement 1 is correct. The Forest Rights Act (FRA) of 2006 is indeed designed to legally recognize and support the rights of Indigenous Peoples and Local Communities (IPLCs) in India, allowing them to manage and protect their lands. This act is a significant legislative measure aimed at correcting historical injustices faced by forest-dwelling communities.

2. Statement 2 is incorrect. The Biological Diversity Act (BDA) of 2002 is primarily focused on the conservation of biological diversity, sustainable use of its components, and fair and equitable sharing of benefits arising from the use of genetic resources. It does not specifically mandate the integration of technology in civil services for biodiversity conservation; rather, it sets a framework for the conservation and sustainable management of biodiversity.

3. Statement 3 is correct. The Panchayats (Extension to Scheduled Areas) Act (PESA) of 1996 extends the provisions of the Panchayat system to the scheduled areas of India and empowers local communities, particularly those in tribal regions, with greater control over their resources, including forest lands and natural resources.

Thus, the correct answer is Option C: 1 and 3 Only.

A significant driver of India's economic growth, as highlighted in the text, is the focus on boosting private investment. This strategy involves incentivizing labor-intensive industries and promoting domestic manufacturing, which can contribute to economic expansion and job creation. By encouraging private investment, the economy can diversify, innovate, and expand, leading to sustainable growth and development.

1. India surpassing Japan to become the fourth-largest economy - 2025: Correct. The April 2025 World Economic Outlook (WEO) predicts that India will surpass Japan to become the fourth-largest economy in 2025.

2. Global growth forecast for 2025 - 3.0%: Incorrect. The global growth forecast for 2025 is 2.8%, not 3.0%. The projection for 2026 is an increase to 3.0%.

3. US economy growth expectation for 2025 - 1.8%: Correct. The report expects the US economy to grow by 1.8% in 2025 due to policy uncertainties and trade tensions.

4. India's GDP growth forecast for 2025 - 6.5%: Incorrect. India's GDP growth forecast for 2025 has been adjusted to 6.2%, not 6.5%.

Two pairs are correctly matched: Pair 1 and Pair 3.

Social media has significantly boosted India's digital economy by fostering the growth of the creator economy and enhancing e-commerce. The number of creators has surged, contributing to a substantial portion of the workforce. Moreover, businesses leverage social media for marketing and customer engagement, which has been instrumental for brands like Patanjali and boAt in gaining visibility. An interesting aspect is how social media has transformed marketing strategies, leading to a more dynamic and accessible marketplace for small businesses and startups.

Climate change is a crucial factor driving the transformation of the Arctic region into a geopolitical and military frontier. The melting ice in the Arctic due to climate change is opening up new sea routes, particularly the Northern Sea Route (NSR), leading to increased commercial interests and military activities in the region. This shift poses challenges and opportunities for various countries, impacting global trade, security, and environmental dynamics.

The Tapti Basin Mega Recharge Project is primarily aimed at ensuring the optimal utilization of river water resources for irrigation across Madhya Pradesh and Maharashtra. This initiative is designed to address water scarcity issues and enhance agricultural productivity, particularly in regions that have been affected by irregular rainfall patterns. An interesting fact about this project is that it is recognized as the world’s largest groundwater recharge scheme, which underscores its significance in managing water resources effectively.

Statement-I correctly highlights the adjustment in India's growth forecast and its position as the fastest-growing major economy. Statement-II accurately describes the significant growth in India's private consumption, emphasizing its role as a crucial driver of economic growth. The information presented in both statements aligns cohesively, with Statement-II providing a supportive explanation for the assertions made in Statement-I. Therefore, option (a) is the correct answer.

The primary objective of introducing Digital Banking Units (DBUs) in India is to provide advanced banking services through self-service platforms available 24/7. These units are designed to enhance financial inclusion by offering various services such as ATMs, cash deposit machines, passbook and internet kiosks, bill payments, and account openings through e-KYC (Know Your Customer). This initiative aims to extend digital financial services to remote areas and improve accessibility to banking services for underserved populations.

The growing trend of political interference compromising bureaucratic independence, leading to a spoils system where loyalty to ruling parties supersedes merit, is a significant challenge faced by India's civil services. This erosion of neutrality can hinder effective governance and service delivery, highlighting the importance of maintaining an impartial and merit-based civil service system.

- Statement 1 is correct. Social media platforms have indeed disrupted traditional media by allowing individuals to share real-time news and opinions, which has been particularly impactful during events like the Covid-19 pandemic and social movements such as #MeTooIndia. This highlights social media's role in amplifying marginalized voices.

- Statement 2 is correct. The rise of social media has been linked to increased anxiety and issues related to self-image among young individuals, as they often seek online validation which can lead to mental health challenges.

- Statement 3 is correct. Social media has contributed to the economic growth of India by supporting small businesses and startups, as evidenced by the surge in the creator economy and the visibility gained by brands such as Patanjali and boAt through effective social media marketing strategies.

All three statements accurately reflect the described impact of social media on society, making Option D the correct answer.

1. India became an Observer nation in the Arctic Council in 2013: This statement is correct. India was granted Observer status in the Arctic Council in 2013, which marked a significant step in its engagement with the Arctic region, primarily to enhance its scientific research and understanding of climate change impacts.

2. The National Centre for Polar and Ocean Research (NCPOR) is responsible for leading India's Arctic studies: This statement is correct. NCPOR, based in Goa, is the nodal agency for polar research in India, and it leads the country's scientific expeditions and studies in the Arctic. NCPOR manages India's research station in Svalbard and coordinates various scientific projects related to biological sciences, glaciology, and climate studies in the Arctic.

3. India's 2022 Arctic Policy emphasizes the establishment of military bases in the Arctic region: This statement is incorrect. India's 2022 Arctic Policy primarily focuses on strengthening scientific research, enhancing maritime cooperation, and understanding climate change impacts. There is no mention or emphasis on establishing military bases in the Arctic region as part of India's policy.

Thus, only statements 1 and 2 are correct, making Option B the correct answer.

- Statement 1 is incorrect. While India experienced a period of higher GDP growth, it was not consistently above 8% for the entire duration from 2006 to 2010. The growth rate was notable but not consistently above this threshold throughout the period.

- Statement 2 is correct. The investment-to-GDP ratio indeed fell from the levels of 39-42% during the high-growth period of 2006-2010 to 33% in 2023, indicating a decline in investment levels relative to GDP.

- Statement 3 is correct. A substantial portion of government revenue being allocated to interest payments (approximately 25%) does indeed limit the government’s capacity to invest in other areas, which is a significant fiscal constraint.

Thus, only statements 2 and 3 are correct.

1. Kani Tribe - Conservation of Agasthyamalai Biosphere Reserve: This pair is correctly matched. The Kani Tribe in Kerala is known for their traditional practices that contribute to the conservation of the Agasthyamalai Biosphere Reserve. They possess deep traditional knowledge about medicinal plants and sustainable resource use.

2. Bishnoi Community - Protection of Asiatic Lion in Gir Forest: This pair is incorrectly matched. The Bishnoi community is renowned for its protection of the Khejri tree and wildlife such as blackbucks, not the Asiatic Lion which is found in Gir Forest, Gujarat. The Asiatic Lion is primarily conserved in the Gir National Park by state efforts and other local communities.

3. Soliga Tribe - Coexistence with wildlife in Biligiri Rangana Hills: This pair is correctly matched. The Soliga Tribe in Karnataka is known for their peaceful coexistence with wildlife, including tigers and elephants, in the Biligiri Rangana Hills (BRT) Tiger Reserve.

4. Tribes in Odisha - Practice of jhum cultivation for soil fertility: This pair is correctly matched. Tribes in Odisha, as well as in Nagaland, practice jhum (shifting) cultivation, which includes long fallow periods that help in maintaining soil fertility.

Pairs 1, 3, and 4 are correctly matched, making a total of two correctly matched pairs out of four.