Economics UPSC PYQ 2017

16.

With reference to the ‘Quality Council of India (QCI)’, consider the following statements:

1.QCI was set up jointly by the Government of India and the Indian Industry.

2.Chairman of QCI is appointed by the Prime Minister on the recommendations of the industry to the Government.

Which of the above statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Correct Answer:

(c) Both 1 and 2

Explanation:

Statement 1 – Correct

The Quality Council of India (QCI) was established in 1997 jointly by the Government of India and Indian industry (CII, FICCI and ASSOCHAM).

It is structured as a public-private partnership model.

Statement 2 – Correct

As per the institutional structure of QCI, the Chairman is appointed by the Prime Minister of India.

The appointment is made based on recommendations from the industry side to the Government.

This reflects QCI’s unique public-private governance structure.

Therefore, both statements are correct.

Memory Trick:

QCI = Quality through Cooperation (Govt + Industry).

Chairman = PM appointed in PPP model.

15.

Consider the following statements:

1.The Standard Mark of Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.

2.AGMARK is a quality Certification Mark issued by the Food and Agriculture Organisation (FAO).

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:

(a) 1 only

Explanation:

Statement 1 – Correct

The Bureau of Indian Standards (BIS) operates the Standard Mark certification scheme.

Under the BIS Act and Quality Control Orders issued by the Government of India, automotive tyres and tubes are notified products for which BIS certification is mandatory.

Therefore, the Standard Mark of BIS is compulsory for such products.

Statement 2 – Incorrect

AGMARK is a certification mark for agricultural products in India.

It is implemented by the Directorate of Marketing and Inspection (DMI), under the Ministry of Agriculture and Farmers Welfare, Government of India.

It is not issued by the Food and Agriculture Organisation (FAO), which is a specialised agency of the United Nations.

Hence, Statement 2 is factually incorrect.

Memory Trick:

BIS = Indian industrial standards (tyres included).

AGMARK= Agriculture product quality + India, not FAO.

14.

Who among the following can join the National Pension System (NPS)?

(a) Resident Indian citizens only

(b) Persons of age from 21 to 55 only

(c) All State Government employees joining the services after the state 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:

(c) All State Government employees joining the services after the state of notification by the respective State Governments

Explanation:

Option (a) – Incorrect

National Pension System (NPS) is open to both Resident Indians and Non-Resident Indians (NRIs).

Therefore, limiting it to “Resident Indian citizens only” is incorrect.

Option (b) – Incorrect

The eligible entry age for NPS (All Citizens Model) is 18 to 70 years (earlier 18 to 60 years).

The age band 21 to 55 is incorrect.

Option (c) – Correct

NPS became mandatory for Central Government employees (except Armed Forces) joining service on or after 1 January 2004.

State Governments adopted NPS on their own notification dates.

Thus, all State Government employees joining service after notification by the respective State Governments are covered under NPS.

Option (d) – Incorrect

NPS applies to Central Government employees joining on or after 1 January 2004, but it excludes Armed Forces personnel.

Note

Armed forces personal are not prohibited from joining the national pension system as a citizen but the official answer key has given the option C as the correct answer.

Since the option includes Armed Forces, it is incorrect.

Memory Trick:

NPS = NRI can join + any indian citizen 18 to 70 years 

13.

What is the purpose of setting up of Small Finance Banks (SFBs) in India?

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:

(a) 1 and 2 only

Explanation:

Small Finance Banks (SFBs) were established by the Reserve Bank of India (RBI) in 2015 with the primary objective of financial inclusion. Their mandate is clearly defined in RBI licensing guidelines.

Statement 1 – Correct

SFBs are specifically intended to supply credit to small business units, including micro and small enterprises.

They are required to extend a significant portion of their lending to priority sector activities.

Statement 2 – Correct

Small and marginal farmers fall under priority sector lending.

SFBs are mandated to provide credit to such underserved agricultural segments.

Statement 3 – Incorrect

The official objective is financial inclusion through provision of savings and credit to underserved sections.

There is no specific mandate to encourage young entrepreneurs as a distinct policy goal.

While young entrepreneurs may benefit indirectly, this is not a stated purpose in RBI guidelines.

Therefore, only Statements 1 and 2 are correct.

Memory Trick:

SFB = Small Credit Bank.

Focus on credit to small businesses and small farmers — not age-based entrepreneurship promotion.

12.

Which of the following is a most likely consequence of implementing the ‘Unified Payments Interface (UPI)’?

(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:

(a) Mobile wallets will not be necessary for online payments.

Explanation:

Option (a) – Correct

Unified Payments Interface (UPI) allows direct bank-to-bank transfer using a Virtual Payment Address (VPA).

It eliminates the need to preload money into a separate wallet.

Before UPI, digital payments largely depended on prepaid mobile wallets.

With UPI, users can pay directly from their bank accounts.

Thus, mobile wallets are no longer necessary for online payments.

(They may still exist, but they are not necessary.)

Option (b) – Incorrect

UPI is a payment system.

It does not introduce digital currency.

Replacement of physical currency depends on monetary policy and public behaviour.

Option (c) – Incorrect

Foreign Direct Investment (FDI) inflows depend on macroeconomic stability, regulatory framework, and growth prospects.

UPI implementation does not directly cause drastic FDI increase.

Option (d) – Incorrect

Direct Benefit Transfer (DBT) primarily depends on Aadhaar-linked bank accounts and banking inclusion.

UPI is not a prerequisite for DBT effectiveness.

DBT was operational even before UPI was introduced.

Hence, the most likely consequence is removal of necessity of mobile wallets → Option (a).

Memory Trick:

UPI = Direct from Bank.

If payment goes directly from bank, wallet becomes optional.

11.

Consider the following statements:

1.National Payment 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:

(c) Both 1 and 2

Explanation:

Statement 1 – Correct

The National Payments Corporation of India (NPCI) is an umbrella organisation for retail payment systems in India.

NPCI is not for profit Company formed by various banks with primary objective of providing cost effective payment solutions to banks.

It operates systems such as Unified Payments Interface (UPI), Aadhaar Enabled Payment System (AePS), National Automated Clearing House (NACH), and Immediate Payment Service (IMPS).

Through low-cost digital payment systems and interoperability, NPCI has significantly promoted financial inclusion by enabling access to banking and digital payments, especially under initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY).

Statement 2 – Correct

NPCI launched RuPay, India’s domestic card payment network, in 2012.

RuPay provides debit, credit and prepaid card services and reduces dependence on foreign card networks.

Therefore, both statements are correct.

Memory Trick:

NPCI = India’s Payment Infrastructure Builder.

RuPay = Ru (Rupee) + Pay → India’s own card network.

10.

What is the purpose of

‘Vidyanjali Yojana’?

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:

(a) 2 only

Explanation:

Vidyanjali Yojana was launched by the Ministry of Education (then Ministry of Human Resource Development) to strengthen government schools through community and private sector participation.

Statement 1 – Incorrect

Vidyanjali Yojana has no connection with permitting foreign educational institutions to open campuses in India.

That issue relates to higher education reforms under the National Education Policy (NEP) 2020, not Vidyanjali.

Statement 2 – Correct

The core objective of Vidyanjali is to improve the quality of education in government schools by engaging volunteers, professionals, retired teachers and private sector participants.

It focuses on academic support, mentoring and co-scholastic activities.

Statement 3 – Incorrect

The scheme does not primarily aim to encourage voluntary monetary contributions for infrastructure development.

It focuses on voluntary services and community participation, not financial donations for school infrastructure.

Memory Trick:

Vidyanjali = “Vidya + Anjali (Service Offering)”

It means offering time and expertise, not money or foreign campuses.

9.

Which of the following are

the objectives of ‘National

Nutrition Mission’?

1.To create awareness

relating to malnutrition

among pregnant women and

lactating mothers.

2.To reduce the incidence of

anaemia 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:

(a) 1 and 2 only

Explanation:

The National Nutrition Mission (NNM), now known as POSHAN Abhiyaan, was launched in 2018 with the objective of improving nutritional outcomes for children, pregnant women and lactating mothers.

Statement 1 – Correct

One of the key objectives is to improve awareness and behavioural change regarding malnutrition among pregnant women and lactating mothers.

It focuses on Information, Education and Communication (IEC) activities and community mobilisation.

Statement 2 – Correct

Reduction of anaemia among young children (6–59 months), adolescent girls and women is a specific target under the mission.

The mission includes convergence with the Anaemia Mukt Bharat strategy.

Statement 3 – Incorrect

Promotion of millets, coarse cereals and unpolished rice is not a stated objective of the National Nutrition Mission.

Although dietary diversity is encouraged, specific promotion of millets is not a defined mission objective.

Statement 4 – Incorrect

Promotion of poultry eggs is not an official objective of the National Nutrition Mission.

Egg inclusion is a State-level policy decision under schemes like Integrated Child Development Services (ICDS), but not a core objective of NNM.

Memory Trick:

POSHAN = Awareness + Anaemia reduction.

If food item promotion is specifically mentioned (millets/eggs), eliminate.

 8.

With reference to ‘National

Investment and

Infrastructure Fund’, which

of the following statements

is/are correct?

1.It is an organ of NITI

Aayog.

2.It has a corpus of Rs.

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:

(d) Neither 1 nor 2

Explanation:

Statement 1 – Incorrect

The National Investment and Infrastructure Fund (NIIF) is not an organ of NITI Aayog.

NIIF is a government-backed investment fund set up in 2015 under the Department of Economic Affairs, Ministry of Finance.

It operates as a Category II Alternative Investment Fund (AIF) registered with the Securities and Exchange Board of India (SEBI).

Therefore, it is institutionally separate from NITI Aayog.

Statement 2 – Incorrect

The Government of India initially announced an intended corpus of Rs. 40,000 crore for NIIF.

The figure Rs. 4,00,000 crore is incorrect and highly exaggerated.

Hence, Statement 2 is factually wrong.

Memory Trick:

NIIF = Finance Ministry Fund, not NITI.

Remember: “NIIF = Investment Fund, not Policy Think Tank.”

7.

What is the aim of the programme ‘Unnat Bharat Abhiyan’?

(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:

(b) Connecting institutions of higher education with local communities to address development challenges through appropriate technologies.

Explanation:

Unnat Bharat Abhiyan (UBA) is an initiative launched by the Government of India in 2014, later restructured in 2018.

Its core objective is to:

• Link higher education institutions (HEIs) with villages

• Identify local development problems

• Apply knowledge and appropriate technology for rural development

• Promote sustainable and inclusive growth

It aims to use the intellectual resources of universities and technical institutions to solve real-life rural challenges.

Memory Trick:

Unnat Bharat = Universities for Villages.

6.

With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)’, consider the following statements:

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:

(b) 2 only

Explanation:

Statement 1 – Incorrect

Under the PBPT Act (as amended in 2016), a benami transaction generally involves property held by one person but paid for by another, for the benefit of the person providing consideration.

Whether the ostensible owner is aware or not does not automatically prevent it from being treated as benami.

Thus, the statement is incorrect.

Statement 2 – Correct

The Act provides that benami properties are liable to be attached and confiscated by the Central Government.

This is one of the key objectives of the amended law—to prevent black money and concealment of assets.

Thus, Statement 2 is correct.

Statement 3 – Incorrect

The Act provides a proper adjudication and appellate mechanism.

It includes:

• Initiating Officer

• Approving Authority

• Adjudicating Authority

Further, appeals lie before the Appellate Tribunal and thereafter to the High Court.

Thus, it is incorrect to say there is no appellate mechanism.

Memory Trick:

Benami = Confiscation + Appeal exists.

5.

Which of the following statements is/are correct regarding the ‘Monetary Policy Committee (MPC)’?

It decides the RBI’s benchmark interest rates.

It is a 12-member body including the Governor of RBI and is reconstituted every year.

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:

(a) 1 only

Explanation:

Statement 1 – Correct

The Monetary Policy Committee (MPC), constituted under the Reserve Bank of India Act, 1934 (as amended in 2016), decides the policy repo rate, which is the RBI’s benchmark interest rate.

Thus, Statement 1 is correct.

Statement 2 – Incorrect

The MPC is a 6-member body, not 12.

It consists of:

• 3 members from RBI (including the Governor)

• 3 external members appointed by the Government of India

Members have a four-year term and are not reconstituted every year.

Thus, Statement 2 is incorrect.

Statement 3 – Incorrect

The MPC is chaired by the Governor of the Reserve Bank of India, not the Union Finance Minister.

Thus, Statement 3 is incorrect.

Memory Trick:

MPC = 6 members, chaired by RBI Governor.

4.

What is/are the advantage/advantages of implementing the ‘National Agriculture Market’ scheme?

It is a pan-India electronic trading portal for agricultural commodities.

It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.

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:

(c) Both 1 and 2

Explanation:

Statement 1 – Correct

National Agriculture Market (e-NAM) is a pan-India electronic trading portal launched in 2016.

It integrates Agricultural Produce Market Committees (APMCs) across states to create a unified national market for agricultural commodities.

Thus, Statement 1 is correct.

Statement 2 – Correct

One of the key objectives of e-NAM is to provide farmers access to a larger, nationwide market beyond their local mandi.

It promotes transparent price discovery through online bidding and allows quality-based trading.

By grading and standardisation, farmers can receive prices aligned with the quality of their produce.

Thus, Statement 2 is correct.

Memory Trick:

e-NAM = Electronic National Agricultural Market.

Electronic + National access + Better price discovery → Both statements correct.

3.

Consider the following statements:

1.Tax revenue as a percent of GDP of India has steadily increased in the last decade.

2.Fiscal deficit as a percent 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:

(d) Neither 1 nor 2

Explanation:

Statement 1 – Incorrect

Tax revenue as a percentage of GDP has not steadily increased over the last decade.

It has fluctuated due to factors such as:

• GST implementation

• Economic slowdown

• COVID-19 pandemic

• Changes in corporate tax rates

There were years of decline and recovery. Hence, the word “steadily” makes the statement incorrect.

Statement 2 – Incorrect

Fiscal deficit as a percentage of GDP has also not steadily increased over the last decade.

It declined for some years, then sharply increased during the COVID-19 period, and later began consolidation again.

Since it did not increase continuously year after year, the word “steadily” makes the statement incorrect.

UPSC often uses the word “steadily” as a trap.

Memory Trick:

If you see “steadily” in macroeconomic data → be cautious.

Indian fiscal and tax ratios fluctuate, they do not move in a straight line.

2.

What is/are the most likely advantages of implementing ‘Goods and Services Tax (GST)’?

It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.

It will drastically reduce the ‘Current Account Deficit’ of India and will enable it to increase its foreign exchange reserves.

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:

(a) 1 only

Explanation:

Statement 1 – Correct

GST subsumed multiple indirect taxes such as VAT, service tax, excise duty, and others.

It created a unified indirect tax structure and reduced cascading (tax on tax).

This helped in creating a common national market by removing inter-state tax barriers.

Thus, Statement 1 is correct.

Statement 2 – Incorrect

Current Account Deficit (CAD) depends mainly on exports, imports, remittances, and services trade.

GST is an indirect tax reform within the domestic economy.

While GST may improve efficiency and competitiveness indirectly, it does not directly or drastically reduce CAD or automatically increase foreign exchange reserves.

Thus, Statement 2 is incorrect.

Statement 3 – Incorrect

GST may improve ease of doing business and economic efficiency.

However, claiming that it will “enormously increase” growth and enable India to overtake China in the near future is exaggerated and speculative.

UPSC often tests such extreme wording.

Thus, Statement 3 is incorrect.

Memory Trick:

GST = Single Market Reform.

If statement claims dramatic external sector impact or overtaking China → exaggeration → incorrect.

1.

Which of the following has/have occurred in India after its liberalization of economic policies in 1991?

Share of agriculture in GDP increased enormously.

Share of India’s exports in world trade increased.

FDI inflows increased.

India’s foreign exchange reserves increased enormously.

Select the correct answer using the codes given below:

(a) 1 and 4 only

(b) 2, 3 and 4 only

(c) 2 and 3 only

(d) 1, 2, 3 and 4

Correct Answer:

(b) 2, 3 and 4 only

Explanation:

Statement 1 – Incorrect

After 1991 liberalisation, the share of agriculture in GDP has steadily declined, not increased.

The Indian economy has structurally shifted towards industry and especially services.

Agriculture’s share has fallen from around 30% in early 1990s to around 15–18% in recent years.

Statement 2 – Correct

India’s share in global exports has increased since 1991.

Although still modest, India’s share in world trade has grown compared to pre-liberalisation levels due to trade openness and export growth.

Statement 3 – Correct

Foreign Direct Investment (FDI) inflows increased significantly after liberalisation.

1991 reforms opened multiple sectors to foreign investment, leading to a sharp rise in FDI inflows over time.

Statement 4 – Correct

India’s foreign exchange reserves increased enormously after liberalisation.

In 1991, reserves were critically low (barely sufficient for a few weeks of imports).

Post-reforms, reserves have grown substantially, reaching hundreds of billions of dollars.

Memory Trick:

1991 = Open economy.

Open economy →

FDI ↑

Exports ↑

Forex reserves ↑

Agriculture share ↓

If agriculture share increased → incorrect.