Poverty, Planning, Finance & Economic - Solved Questions (2016-2024) | UPSC Topic Wise Previous Year Questions PDF Download

Question 1: Consider the following statements:(2023)
Statement-I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.
Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.
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 is the correct explanation for Statement-1
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct

Ans: (a)

• In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes to contain the post pandemic inflation. For Example, since May 2022, the Monetary Policy Committee (RBI) has gone for rate hikes many times. Hence, statement 1 is correct.
• The central banks generally are mandated with the task of containing the rising prices of the commodities. Central banks use monetary policy to manage economic fluctuations and achieve price stability. Hence, Statement 2 is correct.

Question 2: Consider the following statements: (2023)
Statement-I: Carbon markets are likely to be one of the most widespread tools in the fight against climate change.
Statement-II: Carbon markets transfer resources from the private sector to the State.
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 is the correct explanation for Statement-I
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct

Ans: (c)

• Carbon markets, for years short of puff, have at last become one of the most widespread tools in the fight against climate change. By the end of 2021 more than 21% of the world’s emissions were covered by some form of carbon pricing, up from 15% in 2020. Hence, Statement 1 is correct.
• Carbon markets are designed to create a financial mechanism that encourages the reduction of greenhouse gas emissions. In carbon markets, companies and organisations can buy and sell emissions allowances or credits, which represent the right to emit a certain amount of greenhouse gases. While carbon markets can generate revenue for the government through the sale of emissions allowances, it is not accurate to say that they transfer resources solely from the private sector to the government. Hence, statement 2 is NOT correct.

Question 3: Consider, the following statements: (2023)
Statement-I: India accounts for 3.2% of global export of goods.
Statement-II: Many local companies and some foreign companies operating in India have taken advantage of India's ‘Production-linked Incentive’ scheme.
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 is the correct explanation for Statement-I
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statement-I is incorrect but Statement-II is correct

Ans: (d)

• According to the recent WTO’S Global Trade Outlook and Statistics report, India accounts for 1.8 % of global exports of goods. Hence, statement 1 is not correct.
• The ‘Production Linked Initiative’ (PLI) scheme offers companies incentives on incremental sales from products manufactured in India. It aims to attract foreign companies to set up units in India while encouraging local companies to expand their manufacturing units, generate more employment, and reduce the country's reliance on imports. Hence, Statement 2 is correct.

Question 4: In the context of finance, the term ‘beta’ refers to (2023)
(a) the process of simultaneous buying and selling of an asset from different platforms
(b) an investment strategy of a portfolio manager to balance risk versus reward
(c) a type of systemic risk that arises where perfect hedging is not possible
(d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market.

Ans: (d)

• In the context of finance, the term ‘beta’ refers to a measure of how an individual asset moves (on average) when the overall stock market increases or decreases. It is used as a measure of risk and is an integral part of the Capital Asset Pricing Model (CAPM). A company with a higher beta has greater risk and also greater expected returns.
  The beta coefficient can be interpreted as follows:
  • β =1 exactly as volatile as the market β >1 more volatile than the market
  • β <1>0 less volatile than the market β =0 uncorrelated to the market
  • β <0 negatively correlated to the market2
  • The beta coefficient can be calculated by dividing the product of the covariance of the security’s returns and the market’s returns by the variance of the market’s returns over a specified period
• A type of systemic risk that arises where perfect hedging is not possible is called basis risk.
• An investment strategy of a portfolio manager to balance risk versus reward is called asset allocation.
• The process of simultaneous buying and selling of an asset from different platforms, exchanges or locations to cash in on the price difference is called arbitrage.
• A numeric value that measures the fluctuations of a stock to changes in the overall stock market is called beta. Hence, option (d) is correct.

Question 5: Consider the following statements: (2023)

1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.
2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.
3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs.

How many of the above statements are correct?
(a) Only one
(b) Only two
(c) All three
(d) None

Ans: (b)

• Self-Help Group or in-short SHG is now a well-known concept. It is now almost two decade old. It is reported that the SHGs have a role in hastening country’s economic development. SHGs have now evolved as a movement. We can trace the origin of the concept of SHGs in Bangladesh (Dr. Mehmud Yunus). India has adopted the Bangladesh’s model in a modified form.
  • In 1970, Ilaben Bhat, founder member of ‘SEWA’(Self Employed Women’s Association) in Ahmadabad, had developed a concept of ‘women and micro-finance’. The Annapurna Mahila Mandal’ in Maharashtra and ‘Working  Women’s Forum’ in Tamilnadu and many National Bank for Agriculture and Rural Development (NABARD)- sponsored groups have followed the path laid down by ‘SEWA’.
  • In 1991-92 NABARD started promoting self-help groups on a large scale. And it was the real take-off point for the ‘SHG movement’. In 1993, the Reserve Bank of India also allowed SHGs to open saving accounts in banks. Hence, statement 1 is not correct.
• Such groups work as a collective guarantee system formembers who propose to borrow from organised sources. The poor collect their savings and save it in banks. In return they receive easy access to loans with a small rate of interest to start their micro unit enterprise. Hence, statement 2 is correct.

Question 6: With reference to the Indian economy, consider the following statements: (2022)

1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.

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 

Ans: (b)

• To control inflation, RBI sells securities in the money market which absorbs the excess liquidity from the market. Hence, statement 1 is not correct.
• When the rupee depreciates sharply, the Reserve Bank increases the supply of dollars. If interest rates fall in international markets such as in the US or the European Union, it has an effect on the purchase of dollars in the markets of other countries such as India.

Question 7: With reference to the Indian economy, what are the advantages of "Inflation- Indexed Bonds (IIBs)"?(2022)

• Government can reduce the coupon rates on its borrowing by way of IIBs.
• IIBS provide protection to the investors from uncertainty regarding inflation.
• The interest received as well as capital gains on IIBs are not taxable.

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 

Ans: (a)
According to the Reserve Bank of India,

• CIB released in 1997 provided inflation protection only for principal and not for interest payment. While new products of IIB would provide inflation protection for both principal and interest payment.
• The interest rate will be protected from inflation by paying a fixed coupon rate on the principal adjusted against inflation. And the government can reduce the coupon rates on its borrowings in the form of IIBs. Hence statements 1 and 2 are correct.
• Inflation Indexed Bonds (IIBs) were issued during 1997 in the name of Capital Indexed Bonds (CIBs). And IIBs can also be traded in the secondary market (through BSE, NSE, and other stock exchanges), However, if they are sold in the secondary market and profit is made, capital gains tax has to be paid. Hence statement 3 is not correct.

Question 8: With reference to the Indian economy, consider the following statements: (2022)

1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.

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 

Ans: (b)

• To control inflation, RBI sells securities in the money market which absorbs the excess liquidity from the market. Hence, statement 1 is not correct.
• When the rupee depreciates sharply, the Reserve Bank increases the supply of dollars. If interest rates fall in international markets such as in the US or the European Union, it has an effect on the purchase of dollars in the markets of other countries such as India.

Question 9: With reference to the Indian economy, what are the advantages of "Inflation- Indexed Bonds (IIBs)"?(2022)

• Government can reduce the coupon rates on its borrowing by way of IIBs.
• IIBS provide protection to the investors from uncertainty regarding inflation.
• The interest received as well as capital gains on IIBs are not taxable.

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 

Ans: (a)
According to the Reserve Bank of India,

• CIB released in 1997 provided inflation protection only for principal and not for interest payment. While new products of IIB would provide inflation protection for both principal and interest payment.
• The interest rate will be protected from inflation by paying a fixed coupon rate on the principal adjusted against inflation. And the government can reduce the coupon rates on its borrowings in the form of IIBs. Hence statements 1 and 2 are correct.
• Inflation Indexed Bonds (IIBs) were issued during 1997 in the name of Capital Indexed Bonds (CIBs). And IIBs can also be traded in the secondary market (through BSE, NSE, and other stock exchanges), However, if they are sold in the secondary market and profit is made, capital gains tax has to be paid. Hence statement 3 is not correct.

Question 10:  With reference to ‘Water Credit’, consider the following statements :    [2021]
1. It puts microfinance tools to work in the water and sanitation sector.
2. It is a global initiative launched under the aegis of the World Health Organization and the World Bank.
3. It aims to enable the poor people to meet their water needs without depending on subsidies.

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

Correct Answer is Option (a)

 Water Credit is an initiative of water.org

Question 11: If another global financial crisis happens in the near future, which of the following actions/policies are most likely to give some immunity to India ?    [2020-I]
1. Not depending on short-term foreign borrowings
2. Opening up to more foreign banks
3. Maintaining full capital account convertibility

Select the correct answer using the code given below :
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3

Correct Answer is Option (a)

• Keeping full capital account convertibility will make India vulnerable to global crisis, just like the 1997’s crisis among the East Asian countries. So number 3 is wrong.
• If Indian Government /RBI allows opening of more foreign banks in India, there could be a dangerous scenario where foreign problems may percolate into Indian economy. So, #2 is wrong. So we are left with Answer (a) only 1.

Question 12: If you withdraw Rs. 1,00,000 in cash from your Demand Deposit Account at your bank, the immediate effect on aggregate money supply in the economy will be    [2020-I]
(a) to reduce it by ₹ 1,00,000
(b) to increase it by ₹ 1,00,000
(c) to increase it by more than ₹ 1,00,000
(d) to leave it unchanged

Correct Answer is Option (d)

• Aggregate money supply means M3.
• = Coin and currency with public +Demand Deposit with commercial banks +Time Deposits with commercial banks 
• So if you withdraw 100000 rupees from your account then M3 will remain unchanged because ¹ 1 lakh will shift from the column of “demand deposits” to the “coin currency with public.”

Question 13: Along with the Budget, the Finance Minister also places other documents before the Parliament which include ‘The Macro Economic Framework Statement’. The aforesaid document is presented because this is mandated by    [2020-I]
(a) Long standing parliamentary convention
(b) Article 112 and Article 110(1) of the Constitution of India
(c) Article 113 of the Constitution of India
(d) Provisions of the Fiscal Responsibility and Budget Management Act, 2003

Correct Answer is Option (d)

This document is presented as per the Provisions of the FRBM act.

Question 14: Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes ? [2020-I]
1. Working capital for maintenance of farm assets
2. Purchase of combine harvesters, tractors and mini trucks
3. Consumption requirements of farm households
4. Post-harvest expenses
5. Construction of family house and setting up of village cold storage facility
Select the correct answer using the code given below:
(a) 1, 2 and 5 only
(b) 1, 3 and 4 only
(c) 2, 3, 4 and 5 only
(d) 1, 2, 3, 4 and 5

Correct Answer is Option (b)

Kisan Credit Card primarily meant for buying farm inputs. So construction of ‘family house’ seems farfetched. So, #5 is wrong. Further, setting up a village cold storage facility cannot be done through a short-term credit (as given in the question premise) it will require a very long term loan. So, #5 is wrong. By elimination we are left with answer “b”. 

Interestingly no questions from the government schemes related to insurance and pension. Although in the last two years many initiatives were undertaken such as PM Shram Yogi Maan Dhan, Laghu Vyapari Maan Dhan, Kisan Maan Dhan etc. schemes

Question 15: Consider the following statements    [2020-I]
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given- above is/are correct ?
(a) 1 and 2 only
(b) 2 only
(c) 3 only 4,
(d) 1, 2 and 3

Correct Answer is Option (a)

• Under the new monetary policy Framework effective since 2016, RBI tries to control inflation at 2-6% of CPI (All India). So, #3 is wrong. Option c and d eliminated. In both (a & b) the options, statement#2 is common so we have to accept #2 as correct, Even without checking. Everything boils down to whether statement#1 is correct or not?
• Both WPI and CPI are based on Laspeyres formula wherein weightage is assigned to multiple commodities and their prices are tracked. The weight of an individual commodity depends on how frequently it is bought by the consumer. So obviously consumer price index would be giving more weightage to the food products compared to WPI which is aimed at the manufacturers. So, #1 should be correct.

Question 16: With reference to the Indian economy after the 1991 economic liberalization, consider the following statements:     [2020-I]
1. Worker productivity per worker (at 2004-05 prices) increased in urban areas while it decreased in rural areas.

2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in the non-farm economy increased.
4. The growth rate in rural employment decreased.
Which of the statements given above is/are correct ?
(a) 1 and 2 only
(b) 3 and 4 only
(c) 3 only
(d) 1, 2 and 4

Correct Answer is Option (b)

• After the LPG reforms of 1991 it is inevitable that the rural/agriculture workforce would start shifting towards urban/non-agri sectors. So that means #2 is wrong and #3 should be correct.
• Since the total number of workers have remained more or less the same but # of rural workers declined, That means their Percentage share also declined, And it will also hint that growth rate in Rural Employment has decreased. so Statement#2 is wrong while #4 is correct. Only option b fits into this pattern.

Question 17: In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits ?   [2020-I]
1. Cost of restoration of the computer system in case of malware disrupting access to one’s computer
2. Cost of a new computer if some miscreant wilfully damages it, if proved so
3. Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4. Cost of defence in the Court of Law if any third party files a suit
Select the correct answer using the code given below :
(a) 1, 2 and 4 only
(b) 1, 3 and 4 only
(c) 2 and 3 only
(d) 1, 2, 3 and 4

Correct Answer is Option (b)

If you make the word Association that cyber insurance means something that arises out of this internet related cyber security challenge then the second statement is difficult to digest, that if your personal enemy / neighbour’s kid / ex-husband/wife physical damages your computer.’ Insurance firm will pay the cover for that. So, #2 is wrong. By elimination the answer should be “B”.

Question 18: Atal innovation mission is set up under the   [2019-I]
(a) Department of science of technology
(b) Ministry of labour and employment
(c) NITI Ayog
(d) Ministry of skill development and entrepreneurship

Correct Answer is Option (c)

The Atal Innovation Mission (AIM) is a flagship initiative of the Prime Minister, set up by NITI Aayog to promote innovation and entrepreneurship across the length and breadth of the country

Question 19: In a given year in India, official poverty lines are higher in some states than in other because   [2019-I]
(a) Poverty rates vary from state to state
(b) Price levels vary from state to state
(c) Gross state product varies from state to state
(d) Quality of public distribution varies from state to state

Correct Answer is Option (b)

Page 19, Asian Development Bank document on Understanding poverty in India.

• Poverty lines are estimated using the original state specific poverty lines identified by the Expert Group and updating them to 2004–2005 prices using the Consumer Price Index of Agricultural Laborers (CPIAL) for rural poverty lines and Consumer Price Index for Industrial Workers (CPIIW) for urban poverty lines. 
• So, B: price levels is the most appropriate choice.

Question 20: With reference to India’s Five Year Plans, which of the following statements is/are correct?   [2019-I]
1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1,2 and 3

Correct Answer is Option (a)

• 2nd FYP: rapid industrialization with particular emphasis on the development of basic and heavy industries so Statement1 is correct. This eliminates B and C. The correct answer could be A or D. In both these options, second statement is common so we should accept statement #2 to be correct without checking its validity.
• 5th FYP: Fifth Plan (1974-79) was formulated against the backdrop of severe inflationary pressures. objectives of the plan were to achieve self-reliance and adopt measures for raising the consumption standard of people living below the poverty line. This Plan also gave high priority to bring inflation under control and to achieve stability in the economic situation. It targeted an annual growth rate of 5.5 percent in the national income. There is no mention of Financial Sector here, so #3 is wrong. We are left with Answer A: only 1 and 2.

Question 21:  Which of the following statements is/are correct regarding the Maternity Benefit (Amendment) Act, 2017?    [2019-I]
1. Pregnant women are entitled for three months predelivery and three months post-delivery paid leave
2. Enterprises with creches must allow the mother minimum six creche visits daily
3. Women with two children get reduced entitlements.
Select the correct answer using the code given below
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1,2 and 3

Correct Answer is Option (c)

As per the bare act: 

• In case of a woman who has two or more children, the maternity benefit will continue to be 12 weeks. If less than two children then she’ll get 26 weeks paid leave.
• Every establishment with 50 or more employees to provide crèche facilities within a prescribed distance. The woman will be allowed four visits to the crèche in a day. So #2 is wrong. We are left with Answer C: only 3.

Question 22: Considering the following statements:    [2019-I]
1. Purchasing Power Parity (PPP) exchange rates are calculated by the prices of the same basket of goods and services in different countries.
2. In terms of PPP dollars, India is the sixth largest economy in the world.
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

Correct Answer is Option (a)

• PPP: Hypothetical concept that tries to compare two currencies’ exchange rate through their purchasing power in respective countries. So, #1 is right.
• 2014-April, Economic Times: India displaces Japan to become third-largest world economy in terms of PPP: World Bank. So #2 is wrong, we are left with answer A:

  1 only.

Question 23: Which one of the following is not the most likely measure the Government/RBI takes to stop the slide of Indian rupee?    [2019-I]
(a) Curbing imports of non-essential goods and promoting exports
(b) Encouraging indian borrowers to issue rupee denominated Masala bonds
(c) Easing conditions relating to external commercial borrowing
(d) Following an expansionary monetary policy

Correct Answer is Option (d)

To control rupee weakening,

• A: will help by reducing the Current account deficit.
• B: will help by reducing the demand of dollars in loan-repayment.
• C: will help by increasing the inflow of dollars and other currencies.
• D: will backfire, because rupee currency supply will increase without corresponding increase in the supply of dollars and as a result: dollar will strengthen, Indian Rupee will weaken further. So D is the answer.

Question 24: The money multiplier in an economy increases with which one of the following?    [2019-I]
(a) Increase in the cash reserve ratio
(b) Increase in the banking habit of the population
(c) Increase in the statutory liquidity
(d) Increase in the population of the country

Correct Answer is Option (b)

Money Multiplier directly improves with cut in legal reserve ratios (SLR, CRR: so A and D are wrong)

• Money Multiplier indirectly improves as economy develops, consumption/loan demand increases, banking penetration improves etc.

Question 25: Consider the following statements:    [2018-I]
1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
3. Treasury bills offer are issued at a discount from the par value.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 Only
(c) 2 and 3 only
(d) 1, 2 and 3

Correct Answer is Option (c)

• RBI is public debt manager for both state and union Governments, so #1 is wrong. 
• According to Dept of Economic Affairs, Short-term debt of the Central Government on residual maturity basis includes 14-day intermediate treasury bills, regular treasury bills, dated securities maturing in the ensuing one year and external debt with remaining maturity of less than one year. 
• Short-term debt of State Governments comprises internal debt that includes market loans maturing within next one year, and repayment of loans to Centre. Therefore, #2 is right. 
• T-bills are sold at discount and re-purchased at par value (face value). So, #3 is right.

Question 26: If a commodity is provided free to the public by the Government, then:   [2018-I]
(a) the opportunity cost is zero.
(b) the opportunity cost is ignored.
(c) the opportunity cost is transferred from the consumers of the product to the tax-paying public.
(d) the opportunity cost is transferred from the consumers of the products to the Government.

Correct Answer is Option (c)

From the finite money available, Government could build a street light or a water tap. So, opportunity cost is involved in pursuing either one of the activity. Experts were divided over C or D-some interpreting that opportunity cost is borne by the Decision Maker, while others saying opportunity cost is borne by the person who eventually pays for it. UPSC has kept 'C' as the official answer.

Question 27: Increase in absolute and per capita real GNP do not connote a higher level of economic development, if    [2018-I]
(a) industrial output fails to keep pace with agricultural output.
(b) agricultural output fails to keep pace with industrial output.
(c) poverty and unemployment increase.
(d) imports grow faster than exports.

Correct Answer is Option (c)

Economic development includes not only economic growth but also various other economic changes that improve the quality of life or standard of living of people in a country. If with economic growth, a country experiences various economic changes such as reduction in poverty and unemployment, reduction in income and wealth inequality, increase in literacy rate, improvement in health and hygiene, etc, that improve the quality of life then that is economic development. (NIOS Economics Textbook Page 32). So, C is the fitting choice

Question 28: Consider the following statements:     [2017-I]
1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
2. NPCI has launched RuPay, a card payment scheme.
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

Correct Answer is Option (c)

NPCI is a not-for-profit company formed by various banks, with primary objective of providing cost-effective payment solutions to the banks. NPCI's solutions such as IMPS, BHIM, RuPay, AEPS etc. have indeed helped in financial inclusion. So first is correct. And second is correct- NPCI launched Rupay card in 2012, as 7th payment gateway in the world.

Question 29: Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)'?   [2017-I]
(a) Mobile wallets will not be necessary for online payments.
(b) Digital currency will totally replace the physical currency in about two decades.
(c) FDI inflows will drastically increase.
(d) Direct transfer of subsidies to poor people will become very effective.

Correct Answer is Option (a)

"A" is the most appropriate choice. Mobile wallets will not be necessary, because your mobile number is directly linked with the bank account using bank's 'customized app' which is built on the UPI platform.

Question 30: Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?   [2017-I]
1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below:
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 2 and 3 only

Correct Answer is Option (a)

MPC has 6 members, not 12; and it's headed by RBI governor and not Finance Minister. So statement 2 and 3 are wrong, hence by elimination, we reach answer (A) only 1 correct.

Question 31: What is the purpose of setting up of Small Finance Banks (SFBs) in India?     [2017-I]
1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural 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

Correct Answer is Option (a)

While directly or indirectly all three will be encouraged because of Small Finance banks. But when RBI invited applications, the specific purpose were 1 and 2 only.

Question 32: Who among the following can join the National Pension System (NPS)?  [2017-I]
(a) Resident Indian citizens only
(b) Persons of age from 21 to 55 only
(c) All State Government employees joining the services after the date of notification by the respective State Governments
(d) All Central Government employees including those of Armed Forces joining the services on or after 1st April, 2004

Correct Answer is Option (c)

NPS was compulsory for new central govt recruits (except armed forces) WEF 1/1/2004. so "D" is wrong. Any Indian between 18 to 55 can join NPS. So "B" is wrong. NRIs are allowed to open NPS account as per PFRDA norms. So we are left with answer "C".

Question 33: What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?     [2017-I]
1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
2. It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves.
3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Correct Answer is Option (a)

Exports will become ZERO RATED under GST, so statements 2 and 3 would have been correct If examiner had used moderate words "GST will help". But he has used 'extreme' words. GST is unlikely to 'drastically' reduce CAD Because of crude oil import and OPEC cartel that manipulates its prices. Similarly, GST is unlikely to enormously increase size of our economy (IMF projection ~1-1.5% addition in growth rate.) and we can't overtake China in near future, because unlike China we are keeping our currency undervalued against dollar. Hence statement 2 and 3 are wrong. We are left with Answer A.

Question 34: With reference to the 'Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)', consider the following statements:    [2017-I]
1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
2. Properties held benami are liable for confiscation by the Government.
3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) 1 and 3 only
(d) 2 and 3 only

Correct Answer is Option (b)

Act provides is an appellate tribunal, and they're required to finish case within one year. So #3 is wrong, by elimination, we are left with A and B. So, B is most appropriate because IT dept. (=therefore Government) can seize the benami properties.

Question 35: Consider the following statements:     [2017-I]
1. Tax revenue as a per cent of GDP of India has steadily increased in the last decade.
2. Fiscal deficit as a per cent of GDP of India has steadily increased in the last decade.
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

Correct Answer is Option (d)

If we look at the overall trend from 2007 to 2017 there is gradual increase but on yearly basis there have been ups and downs. So, Neither Tax revenue nor Fiscal deficit as a percentage of GDP have steadily increased. UPSC kept D is the official answer

Question 36: What is the aim of the programme 'Unnat Bharat Abhiyan'?    [2017-I]
(a) Achieving 100% literacy by promoting collaboration between voluntary organizations and government's education system and local communities.
(b) Connecting institutions of higher education with local communities to address development challenges through appropriate technologies.
(c) Strengthening India's scientific research institutions in order to make India a scientific and technological power.
(d) Developing human capital by allocating special funds for health care and education of rural and urban poor, and organizing skill development programmes and vocational training for them.  

Correct Answer is Option (b)

Answer is "b" as per the Press Information Bureau

Question 37: With reference to 'National Investment and Infrastructure Fund', which of the following statements is/are correct?     [2017-I]
1. It is an organ of NITI Aayog.
2. It has a corpus of ` 4, 00,000 crore at present.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer is Option (d)

NIIF is under Department of Economic Affairs. So first statement is wrong. It was setup in Budget 2015, with Rs.40k crores, but even if counting the recent allotments till Budget 2017, the 4 lakh amount is unrealistic. So, second statement is also wrong.

Question 38: Which of the following are the objectives of 'National Nutrition Mission'?    [2017-I]
1. To create awareness relating to malnutrition among pregnant women and lactating mothers.
2. To reduce the incidence of anemia among young children, adolescent girls and women.
3. To promote the consumption of millets, coarse cereals and unpolished rice.
4. To promote the consumption of poultry eggs.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 1, 2 and 3 only
(c) 1, 2 and 4 only
(d) 3 and 4 only

Correct Answer is Option (a)

While this mission will certainly increase consumption of millets, coarse cereals and eggs once people become aware of their nutritional benefits, but promoting their 'consumption' is not the explicit objective of this mission. Explicitly stated objectives are only 1 and 2. So, experts were divided between A and B and C- because in the 2016's UN-REDD+ question, UPSC official even kept 'indirect benefit' of poverty removal as one of the objective. But in official answer key of 2017, they have gone only by literal interpretation of explicitly mentioned 'direct benefits, and they chose 'A' as the official answer.

Question 39: What is the purpose of Vidyanjali Yojana'?    [2017-I]
1. To enable the famous foreign educational institutions to open their campuses in India.
2. To increase the quality of education provided in government schools by taking help from the private sector and the community.
3. To encourage voluntary monetary contributions from private individuals and organizations so as to improve the infrastructure facilities for primary and secondary

schools.
Select the correct answer using the code given below:
(a) 2 only
(b) 3 only
(c) 1 and 2 only
(d) 2 and 3 only

Correct Answer is Option (a)

• Indian express June 2016: HRD Ministry has launched an initiative called 'Vidyanjali' to encourage youngsters to volunteer their services at any neighborhood government school. So accordingly "A" is the most appropriate choice. 
• What about statement "3"? While the mygov.in portal guidelines mention that Vidyanjali will cover initiatives under CSR, PPP, PSU. But mobilization of voluntary monetary contribution is not the primary and explicit 'purpose' of the scheme. 
• And the scheme is targeted at primary (Class 1 to 5) and upper primary classes (Class 6 to 8) so 'secondary schools' infrastructure facilities' are beyond its scope of work. HRD ministry's other schemes specifically count class 9 onwards as 'secondary education' Hence 3 is wrong. Therefore, Answer is "A".

Question 40: What is/are the purpose/purposes of ‘District Mineral Foundations’ in India?    [2016-I]
1. Promoting mineral exploration activities in mineralrich districts
2. Protecting the interests of the persons affected by mining operations
3. Authorizing State Governments to issue licences for mineral exploration
Select the correct answer using the code given below.
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3

Correct Answer is Option (b)

District Mineral Foundation (DMF) is a trust set up as a non-profit body, in those districts affected by the mining works, to work for the interest and benefit of persons and areas affected by mining related operations. It is funded through the contributions from miners. Its manner of operation comes under the jurisdiction of the relevant State Government.

Question 41: ‘SWAYAM’, an initiative of the Government of India, aims at    [2016-I]
(a) promoting the Self Help Groups in rural areas
(b) providing financial and technical assistance to young start-up entrepreneurs
(c) promoting the education and health of adolescent girls
(d) providing affordable and quality education to the citizens for free

Correct Answer is Option (d)

SWAYAM or Study Webs of Active–Learning for Young Aspiring Minds programme of Ministry of Human Resource Development, Government of India. Professors of centrally funded institutions like IITs, IIMs, central universities will offer online courses to citizens of India. All courses would be offered free of cost under this.

Question 42: Regarding DigiLocker, sometimes seen in the news, which of the following statements is/are correct?    [2016-I]
1. It is a digital locker system offered by the Government under Digital India Programme.
2. It allows you to access your e-documents irrespective of your physical location.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer is Option (c)

DigiLocker is a “digital locker” service launched by the Government of India in February 2015 to provide a secure dedicated personal electronic space for storing the documents of resident Indian citizens.

Question 43: ‘Mission Indradhanush’ launched by the Government of India pertains to    [2016-I]
(a) immunization of children and pregnant women
(b) construction of smart cities across the country
(c) India’s own search for the Earth-like planets in outer space
(d) New Educational Policy

Correct Answer is Option (a)

(i) The Government of India launched Mission Indradhanush in December 2014 with the ultimate goal to ensure that all children under the age of two years and pregnant women are fully immunized with all available vaccines.
(ii) This mission aims to achieve 100% vaccination of children and pregnant women by 2020.

Question 44: With reference to ‘Financial Stability and Development Council’, consider the following statements:    [2016-I]
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the economy.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

Correct Answer is Option (c)

(i) Financial Stability and Development Council is an apex-level body constituted by the government of India. The idea to create such a super regulatory body was first mooted by the Raghuram Rajan Committee in 2008. Finally in 2010, the then Finance Minister of India, Pranab Mukherjee, decided to set up such an autonomous body dealing with macro prudential and financial regularities in the entire financial sector of India.

(ii) It falls under Dep. Of economic affairs and FM is the chairman. So, 1 is wrong and 2 is right. By elimination, we are left with answer “c”.

Question 45: Regarding ‘Atal Pension Yojana’, which of the following statements is/are correct?    [2016-I]
1. It is a minimum guaranteed pension scheme mainly targeted at unorganized sector workers.
2. Only one member of a family can join the scheme.
3. Same amount of pension is guaranteed for the spouse for life after subscriber’s death.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Correct Answer is Option (c)

There is no restriction as such that only one member of a family can join the scheme.

Question 46: With reference to ‘Stand up India scheme’, which of the following statement is/are correct?    [2016-I]
1. Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs.
2. It provides for refinance through SIDBI.
Select the correct answer using the code given below.
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer is Option (c)

(i) Prime Minister launched the ‘Stand up India Scheme’ aimed at promoting entrepreneurship among Scheduled Castes/Scheduled Tribes and women by giving loans in the range of ₹ 10 lakh to ₹ 1 crore for setting up a new enterprise. There would be a ` 10,000 crore refinance window through Small Industries Development Bank of India (SIDBI) and the National Credit Guarantee Trustee Company Ltd (NCGTC) will create a corpus of ₹ 5,000 crore.
(ii) Both statements are correct as per : Press Information Bureau (PIB) Government of India Ministry of Finance/03-April-2016.

Question 47:  Pradhan Mantri MUDRA Yojana is aimed at    [2016-I]
(a) bringing the small entrepreneurs into formal financial system
(b) providing loans to poor farmers for cultivating particular crops
(c) providing pensions to old and destitute persons
(d) funding the voluntary organizations involved in the promotion of skill development and employment generation

Correct Answer is Option (a)

(i) Pradhan Mantri Mudra Yojana under the Micro Units Development and Refinance Agency (MUDRA) Bank is a new institution being set up by Government of India for development and refinancing activities relating to micro units. It was announced by the Finance Minister while presenting the Union Budget for FY 2016. The purpose of MUDRA is to provide funding to the non corporate small business sector.

Question 48: Which one of the following is a purpose of ‘UDAY’, a scheme of the Government?    [2016-I]
(a) Providing technical and financial assistance to start-up entrepreneurs in the field of renewable sources of energy
(b) Providing electricity to every household in the country by 2018
(c) Replacing the coal-based power plants with natural gas, nuclear, solar, wind and tidal power plants over a period of time
(d) Providing for financial turnaround and revival of power distribution companies

Correct Answer is Option (a)
Ujwal DISCOM Assurance Yojana (UDAY) is the financial turnaround and revival package for electricity distribution companies of India (DISCOMs) initiated by the Government of India with the intent to find a permanent solution to the financial mess that the power distribution is in.