Indian Economy

* Statement I is incorrect: India's share in global merchandise trade is only 1.8% and 4% in global services. India plans to increase its export share in global trade from 2.1% to 3% by 2027 and 10% by 2047.

* Statement II is correct: The PLI scheme is open to both domestic and international manufacturers. Samsung as well as Indian firms such as Dixon Technologies, UTL, Neolyncs, Lava International, Optiemus Electronics and Micromax are also expanding their factories to take advantage of the PLI scheme.

Statement 1 is correct: The Government of India announces Minimum Support Prices (MSP) for 22 mandated crops and Fair and Remunerative Price (FRP) for sugarcane. Niger seed is one of the 14 Kharif crops for which MSP is officially provided by the Commission for Agricultural Costs and Prices (CACP).

Statement 2 is correct: Niger (Guizotia abyssinica) is an oilseed crop primarily grown during the Kharif season in India. It is a minor oilseed crop that can grow in poor soils and is often cultivated in hilly and tribal areas.

Statement 3 is correct: Niger seed oil is traditionally used for cooking by various tribal communities, particularly in states like Odisha, Chhattisgarh, and Madhya Pradesh. Apart from cooking, the oil is also used for lighting, lubrication, and in the preparation of soaps and medicines.

Sterilization refers to the process by which the Reserve Bank of India (RBI) neutralizes the impact of foreign exchange inflows or outflows on the domestic money supply. When there is a surge in foreign capital inflows, the RBI often buys foreign currency (like US Dollars) to prevent the Indian Rupee from appreciating excessively. This purchase injects an equivalent amount of Indian Rupees into the banking system, increasing liquidity and potentially causing inflation. To 'sterilize' or offset this effect, the RBI conducts Open Market Operations (OMO) by selling government securities in the open market to absorb the excess liquidity. Conversely, during capital outflows, the RBI sells foreign currency and buys government securities to maintain liquidity. Thus, Open Market Operations are the primary instrument used for sterilization to maintain monetary stability.

* Statement 1 is correct. According to data from the Food and Agriculture Organization (FAO) and other agricultural databases, India does have more arable land than China. As of recent data, India's arable land is approximately 157 million hectares, whereas China's arable land is around 119 million hectares.

* Statement 2 is incorrect. While India has a substantial amount of irrigated land, China has implemented extensive irrigation projects and has a higher proportion of its arable land irrigated. As a percentage of arable land, China's irrigated land is higher than that of India.

* Statement 3 is also incorrect. China has a higher average agricultural productivity per hectare compared to India. This is due to several factors, including technological advancements, better infrastructure, and more effective agricultural practices in China.

* Statement I is correct In 2021, Switzerland exported $86.7B in Gold, making it the 1st largest exporter of Gold in the world. Switzerland is consistently the world's leading gold-exporting country based on value. (Please note: The list is dynamic & keeps varying yearly)

* Statement II is not correct. The United States is way out in front as the country with the largest gold reserves in the world at 8,000 tonnes (as of 2024).

* In India, the largest resources of gold ore (primary) are located in Bihar (44%) followed by Rajasthan (25%), Karnataka (21%), West Bengal (3%), Andhra Pradesh (3% ), Jharkhand (2 %). The remaining 2% resources of ore are located in Chhattisgarh, Madhya Pradesh, Kerala, Maharashtra and Tamil Nadu. (PIB 2021)

* India is one of the largest gold importers, sourcing 800-1,000 tons annually, mainly from Switzerland, the UAE, and South Africa. Imports are driven by high domestic demand for jewelry and investment. Gold exports, primarily in jewelry, target the US, UAE, and Hong Kong, supporting India's trade through its jewelry manufacturing sector.

Statement 1 is incorrect: Following the Union Budget 2025-26 and the subsequent notification by the Ministry of MSME (effective April 1, 2025), the classification criteria were significantly revised to account for inflation and encourage scaling. A Medium enterprise is now defined as an unit where the investment in plant and machinery or equipment does not exceed ₹125 crore and the annual turnover does not exceed ₹500 crore. Even under the previous 2020 definition (which set the limit at ₹50 crore investment), the range of ₹15–25 crore mentioned in the statement does not align with the legal thresholds.

Statement 2 is correct: Under the RBI Master Direction on Priority Sector Lending (PSL), all bank loans to Micro, Small, and Medium Enterprises are eligible for classification under the priority sector. While Micro enterprises have specific sub-targets within the PSL framework, credit extended to Medium enterprises counts toward a bank's overall Priority Sector achievement.

Capital markets are financial markets where long-term securities, such as stocks and bonds, are traded. They provide a platform for raising capital for businesses and governments.

On the other hand, Money markets are financial markets where short-term securities such as T-Bill, C-Paper, Cash Management Bills, Ways and Means advances, etc are traded.

* Statement 1 is correct- Government bonds are long-term debt securities issued by governments to finance their activities. The government bond market is a part of the capital market as it involves the trading of long-term debt securities.

* Statement 2 is incorrect- The call money market is a short-term market where funds are borrowed and lent for very short durations, usually overnight. It deals with short-term funds, and its transactions are not classified as part of the capital market.

* Statement 3 is incorrect- Treasury bills are short-term debt instruments issued by governments to finance their short-term cash flow requirements. The treasury bill market, similar to the call money market, deals with short-term instruments and is not considered part of the capital market.

* Statement 4 is correct- The stock market, also known as the equity market or share market, is where shares or stocks of publicly listed companies are bought and sold. The stock market is a part of the capital market as it involves the trading of ownership interests (equity securities) in companies.

Statement 1 is Correct: Central Bank Digital Currencies (CBDCs) allow for direct peer-to-peer cross-border transactions. By using a common platform or bilateral arrangements between central banks, payments can be settled directly without relying on the US dollar as a vehicle currency or the SWIFT (Society for Worldwide Interbank Financial Telecommunication) messaging system.

Statement 2 is Correct: CBDCs are considered 'programmable money.' Central banks can embed smart contracts into the currency, allowing it to be distributed with specific conditions, such as an expiration date (time-frame) for spending or restricting its use to specific purposes like fuel or food subsidies.

The Fifteenth Finance Commission (XVFC) recommended the following criteria and weights for horizontal tax devolution among states for the 2021-26 period:

1. Income Distance (45%): The distance of a state's income from the state with the highest income. 2. Population (15%): Based on the 2011 Census data. 3. Area (15%): To account for the higher cost of providing services in larger geographical areas. 4. Forest and Ecology (10%): Calculated based on the share of the dense forest of each state in the total dense forest of all states. 5. Demographic Performance (12.5%): This criterion was introduced to reward states that have made progress in lowering their fertility rates (using 1971 population data as a benchmark). 6. Tax and Fiscal Efforts (2.5%): To reward states with higher tax collection efficiency.

Analysis of the given list: - Demographic performance: Included (Criterion 5) - Forest and ecology: Included (Criterion 4) - Tax and fiscal efforts: Included (Criterion 6) - Governance reforms: Not included as a criterion for horizontal devolution. - Stable government: Not included as a criterion for horizontal devolution.

Apart from population, area, and income distance, the Commission used three criteria from the list provided (Demographic performance, Forest and ecology, and Tax and fiscal efforts).

* Pair 1 is correct: Kamarajar Port, located on the Coromandel Coast about 24 km north of Chennai Port, Chennai, is the 12th major port of India, and the first port in India which is a public company. The Kamarajar Port is the only corporatized major port and is registered as a company. Today, the landlord port is the dominant port model in larger and medium-sized ports.

* Pair 2 is correct: Mundra Port is the largest private port in India. The port of Mundra is located on the north shores of the Gulf of Kutch near Mundra, Kutch district, in the state of Gujarat. Mundra is a major hub for containers and bulk cargo. It is run by Adani Ports and SEZ Limited (APSEZ) and began operations in 2001. Mundra Airport is undergoing major developments to convert it into an international airport for air cargo.

* Pair 3 is incorrect: Jawaharlal Nehru Port Trust Nhava Sheva (JNPT) is the largest container port in India and one of the most essential subcontinent harbours on the Western coast.


* Statement-I is correct: In the aftermath of the COVID-19 pandemic, global economies faced significant inflationary pressures due to supply chain disruptions and increased demand. To curb this inflation, many central banks, including the US Federal Reserve and the Reserve Bank of India, initiated a series of interest rate hikes to reduce liquidity in the market. * Statement-II is correct: A core principle of modern central banking is the belief that monetary policy tools—specifically adjusting interest rates—can influence economic activity and price levels. By raising rates, central banks aim to reduce spending and investment, thereby cooling down rising consumer prices. * Relationship: Statement-II explains the underlying logic behind the actions mentioned in Statement-I. Central banks carried out interest rate hikes *because* they operate under the assumption that such monetary policy measures are effective tools to counteract inflation. Thus, Statement-II is the correct explanation for Statement-I.

The 'Small Farmer Large Field' (SFLF) model is a participatory collective action model designed to help small and marginal farmers overcome constraints like low bargaining power and lack of economies of scale.

* Why Option B is correct: In the SFLF model, many marginal farmers in a contiguous area organize themselves into groups to synchronize and harmonize selected agricultural operations (such as land preparation, sowing, and harvesting). This allows them to achieve economies of scale in purchasing inputs and marketing produce without losing their individual land ownership. * Context: This model was adapted from the 'Large Field' model successfully implemented in Vietnam. In India, it was piloted (notably in Odisha) to address the challenges of land fragmentation. * Why other options are incorrect: * Option A describes a resettlement or rehabilitation program for displaced persons. * Options C and D describe variations of contract farming or corporate farming, where farmers either surrender land for a fixed term or produce specifically for a company's manufacturing needs. SFLF differs because it is a farmer-led collective model rather than a corporate-led one.

In finance, Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. It is a key component of the Capital Asset Pricing Model (CAPM).

Key Interpretations of Beta: * Beta = 1: The stock's price moves in lockstep with the market. If the market rises by 10%, the stock is expected to rise by 10%. * Beta > 1: The stock is more volatile than the market. For example, a beta of 1.2 suggests the stock is 20% more volatile than the market. * Beta < 1: The stock is less volatile than the market. These are often considered 'defensive' stocks. * Beta = 0: The asset's price movement is uncorrelated with the market (e.g., cash or certain government bonds).

Analysis of other options: * Option A: Describes Arbitrage, which is the simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset's listed price. * Option C: Refers to Basis Risk, which arises when the investment or hedge does not move in perfect correlation with the underlying asset, making a perfect hedge impossible.

* Statement I is Incorrect : Earlier, InvITs offered some tax benefits to investors. However, the budget in 2023 changed the taxation structure. Currently, all income distributed by InvITs, including interest income, dividend income, and rental income, is taxable in the hands of the unitholders according to their income tax slab.

* Statement II is Correct : InvITs are indeed recognized as borrowers under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). This Act allows InvITs to access various financing options and enforce security interests in case of defaults.

* Statement 1 is incorrect: NABARD began promoting self-help groups in 1991-1992. And it served as the actual launch pad for the SHG movement. The Reserve Bank of India additionally permitted SHGs to open savings bank accounts in 1993.

* Statement 2 is correct: The Banks provide the loan to the Self-Help Group as a whole and it is the collective responsibility of the SHG to repay that loan. Hence all members of a group take responsibility for a loan that an individual member takes. Further, the SHG may decide to not provide any share in further loans to the defaulter member.

* Statement 3 is correct: The Financial Inclusion Fund scheme to support Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) for enabling Dual Authentication options in the micro ATMs for SHG transactions is being launched to provide an enabling eco-system for the SHGs to seamlessly operate at Business Correspondent points with the proposed Dual Authentication feature. Thus, it can be said that SCBs and RRBs support the SHGs in availing the credits as per their needs.

Statement 1 is incorrect: Credit Rating Agencies (CRAs) in India are regulated by the Securities and Exchange Board of India (SEBI) under the SEBI (Credit Rating Agencies) Regulations, 1999, and not by the Reserve Bank of India. Major credit rating agencies registered with SEBI include CRISIL, CARE, ICRA, SMERA, Brickwork Ratings, and India Ratings and Research.

Statement 2 is correct: ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was established in 1991 and is a public limited company listed on the Bombay Stock Exchange and the National Stock Exchange.

Statement 3 is correct: Brickwork Ratings (BWR) is a SEBI-registered Indian credit rating agency. It is also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI) for bank loan ratings. It was established in 2007 and is promoted by Canara Bank.

Statement 1 is incorrect. After the 1991 economic liberalization, worker productivity increased both in urban and rural areas. While urban areas experienced higher growth, rural areas also saw improvements, especially with the rise in non-farm activities.

Statement 2 is incorrect. The percentage share of rural areas in the workforce has steadily decreased since liberalization. This is because more people have moved to urban areas for employment in the industrial and service sectors, contributing to the growing urban workforce.

Statement 3 is correct. In rural areas, the growth of the non-farm economy increased significantly. With liberalization, the diversification of rural economies into sectors like manufacturing, construction, and services grew, reducing the dependency on agriculture.

Statement 4 is correct. The growth rate in rural employment decreased after 1991. While the rural economy diversified, the agricultural sector did not provide enough employment opportunities to absorb all the labor, leading to lower growth in rural employment.

Hence, option B is the correct answer.

Under the Kisan Credit Card (KCC) scheme, short-term credit support is provided to farmers for purposes that directly support agricultural activities and the farm household.

Statement 1 is correct. The KCC scheme provides working capital for the maintenance of farm assets, which includes expenses for irrigation, fertilizers, and labor costs.

Statement 2 is incorrect. The KCC scheme's short-term credit component does not cover the purchase of capital-intensive assets such as combine harvesters, tractors, and mini trucks. These are typically financed through long-term investment credit, not short-term working capital.

Statement 3 is correct. The KCC scheme provides credit for the consumption requirements of the farm household (usually capped at a certain percentage of the limit).

Statement 4 is correct. The KCC scheme covers post-harvest expenses, including costs for storage, transportation, and marketing of produce.

Statement 5 is incorrect. The construction of a family house and setting up of village cold storage facilities are long-term capital investments and are not covered under the short-term credit support of the KCC scheme.

As per RBI/NABARD guidelines, the eligible activities for KCC are: - Short-term credit requirements for cultivation of crops. - Post-harvest expenses. - Produce marketing loan. - Consumption requirements of farmer household. - Working capital for maintenance of farm assets and activities allied to agriculture like dairy animals, inland fishery, etc. - Investment credit requirement for agriculture and allied activities like pumpsets, sprayers, dairy animals, etc. (Note: The question specifically asks for short-term credit support).

Hence, option B is the correct answer.

Statement 1 is Correct: Cyber insurance policies for individuals typically cover the costs incurred for restoring the computer system and data if they are corrupted or disrupted by a malware attack.

Statement 2 is Incorrect: Cyber insurance is designed to cover digital risks, liabilities, and financial losses; it does not cover physical damage to hardware or the cost of replacing a computer due to physical vandalism.

Statement 3 is Correct: In the event of cyber extortion (such as ransomware), these policies generally cover the expenses of hiring specialized consultants to investigate the threat and minimize potential losses.

Statement 4 is Correct: Cyber insurance provides coverage for legal defense costs if a third party files a lawsuit against the insured for privacy breaches, data theft, or defamation resulting from a cyber incident.

Statement 1 is Correct (Data storage in India): This is the core requirement of the directive. It mandates that the entire payment system data be stored in systems located only in India. This aims to improve data security and regulatory oversight.

Statement 2 is Incorrect (Public sector ownership): The directive doesn't specify ownership requirements for the data storage systems. Private companies can also store data as long as the systems are located within India.

Statement 3 is Incorrect (Audit report submission): The directive des not have reporting requirements for system audits to the Comptroller and Auditor General of India (CAG) which typically audits government entities.

Nationalisation: Yes, the coal sector was nationalised by the Indira Gandhi government in phases during the 1970s. Hence, Statement 1 is Correct.

Coal block allocation: Coal blocks are not allocated through a lottery system. They are currently allocated through auctions, a shift from the previous system of administrative allocation. Hence, Statement 2 is Incorrect.

Coal self-sufficiency: India is not entirely self-sufficient in coal production. While domestic production has increased, there is still a gap that is met through imports. Hence, Statement 3 is Incorrect.

India has consistently been the world's largest exporter of rice since 2012. For the five-year period preceding 2019 (the year of the examination), India maintained its top position globally, followed by countries like Thailand and Vietnam. In 2018, India's rice exports were valued at approximately US$7.4 billion, representing about 30% of the total global rice exports. While China is the world's largest producer of rice, it is also a significant consumer and importer, whereas India dominates the global export market.

Statement 1 is correct: The 2018 Amendment expanded Fixed-Term Employment (FTE) to all sectors. FTE allows an employer to hire a worker for a fixed period via a written contract. A key feature of FTE is that the "termination of service of the workman as a result of non-renewal of the contract" does not amount to retrenchment. Since retrenchment procedures (under the Industrial Disputes Act) are the primary hurdle to laying off workers in India, FTE makes it significantly easier for firms to reduce their workforce.

Statement 2 is correct: Under the Industrial Employment (Standing Orders) Central Rules, a temporary workman is defined as a person engaged for work which is of an essentially temporary nature. The rules explicitly state that no notice of termination of employment shall be necessary for such a workman. Furthermore, for Fixed-Term workers, the 2018 rules specify that no notice is required if the employment ends due to the expiry of the contract.

The Global Competitiveness Report is published by the World Economic Forum (WEF).

Option A is incorrect. The International Monetary Fund (IMF) primarily focuses on macroeconomic policies, financial stability, and global monetary cooperation, but it does not publish the Global Competitiveness Report.

Option B is incorrect. The United Nations Conference on Trade and Development (UNCTAD) deals with trade, investment, and development issues but is not responsible for this report.

Option C is correct. The World Economic Forum (WEF) releases the Global Competitiveness Report (GCR), which assesses the competitiveness of countries based on various economic indicators such as infrastructure, macroeconomic stability, health, education, market efficiency, and innovation.

Option D is incorrect. The World Bank publishes reports related to economic development, poverty reduction, and business environments, such as the Ease of Doing Business Report, but it does not release the Global Competitiveness Report.

Statement 1 is Incorrect: The Petroleum and Natural Gas Regulatory Board (PNGRB) was established under the PNGRB Act, 2006. It is not the first regulatory body in India; several others were established much earlier, such as the Securities and Exchange Board of India (SEBI), which was granted statutory status in 1992, and the Telecom Regulatory Authority of India (TRAI), established in 1997.

Statement 2 is Correct: One of the primary mandates of the PNGRB, as defined in the PNGRB Act, 2006, is to protect the interests of consumers and entities engaged in activities relating to petroleum, petroleum products, and natural gas, and to promote competitive markets within the sector.

Statement 3 is Correct: Under Section 30 of the PNGRB Act, 2006, the Appellate Tribunal established under Section 110 of the Electricity Act, 2003 (known as the Appellate Tribunal for Electricity or APTEL) acts as the appellate authority to hear appeals against the decisions or orders of the PNGRB.

* Service area approach (SAA) is an improved version of area approach of Lead Bank Scheme.

* Under SAA plan, each commercial bank / RRB branch in the rural and semi-urban area is designated to serve 15 to 25 villages for the planned and orderly development of rural and semi-urban areas.

* The designated branch of a bank has to meet the banking needs of its service area vis--vis forge effective linkages between bank credit, production, productivity, and increase in income levels of the villages.

Statement 1 is incorrect: The National Programme for Organic Production (NPOP) is operated under the guidelines and directions of the Ministry of Commerce and Industry, not the Ministry of Rural Development or the Ministry of Agriculture. It provides the framework for the accreditation of certification bodies and standards for organic production.

Statement 2 is correct: The Agricultural and Processed Food Products Export Development Authority (APEDA) functions as the Secretariat for the implementation of NPOP. APEDA is a statutory body under the Ministry of Commerce and Industry responsible for the export promotion of agricultural products.

Statement 3 is correct: In 2016, Sikkim became India's first fully organic state, having successfully converted all its cultivable land to organic farming practices.

Therefore, the correct answer is 2 and 3 only.

The equalization levy on online advertisement services offered by non-resident entities is introduced as a separate tax under the Finance Act, not as a part of the Income Tax Act.

Non-resident entities cannot claim a tax credit in their home country under the "Double Taxation Avoidance Agreements" because the equalization levy is not an income tax. It is a separate tax levied on specified services provided by non-residents to residents.

Hence, option A is the correct answer.

Note: The Indian government has abolished the 6% Equalization Levy on online advertisements, with effective from April 1, 2025.

Statement 1 is incorrect. The govt has been infusing large amounts in seven public sector banks through recapitalisation bonds but this has not been steady as statement 1 says.

Statement 2 is correct. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected. For example, the merger of SBI associate banks will result in the creation of a stronger merger entity.

Hence, option C is the correct answer.

Legal tender is any form of payment recognized by law that a creditor is legally obligated to accept for the settlement of a debt or financial obligation. In India, currency notes issued by the RBI and coins issued by the Government of India constitute legal tender.

Why Option B is correct: The defining characteristic of legal tender is the legal compulsion on the creditor. If a debtor offers legal tender to settle a claim, the creditor cannot refuse it and subsequently sue for non-payment of the debt.

Why Option C is incorrect: Bank money such as cheques, drafts, and bills of exchange are considered 'fiduciary money.' Their acceptance depends on the trust between the parties involved; a creditor is not legally compelled to accept a cheque and can insist on payment in cash (legal tender).

Why Option D is incorrect: While metallic coins are indeed legal tender (under the Coinage Act, 2011), legal tender also includes paper currency notes. Therefore, defining it solely as metallic money is incomplete.