UPSC Essentials | Daily subject-wise quiz : Attempt important Economy MCQs with answers on gross NPA ratio of public sector banks, Quick commerce and more (Week 121)

QUESTION 1

In India, which of the following factors are considered for calculating the minimum wage?

1. Nature of the work

2. Skill level

3. Cost of living

4. Expenditure on health and education

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1, 2 and 3

(c) 3 and 4 only

(d) 2, 3 and 4

Explanation

— “Income is a make-or-break factor driving women’s exit from the blue-grey collar workforce,” the report by Quess Corp, India’s largest staffing firm, and the Udaiti Foundation, said. “Women already face steep opportunity costs to join the workforce. Inadequate wages that ignore local realities simply drive them out,” it added, flagging a “clear gap between minimum wage and living wage”.

— The need to align minimum wage with real living costs has also gained traction among top policymakers. The Union Ministry of Labour and Employment, for instance, is discussing the concept of a living wage, which factors in expenditure on health and education that is currently excluded from minimum wage calculations.

— In India, minimum wage calculations are primarily based on the Minimum Wages Act, 1948, which mandates that employers pay at least the minimum wage as fixed by the central or state governments. These wages are typically calculated on a 26-day month basis. The calculation considers factors like the nature of the work, skill level, and cost of living, including components like basic wages, cost of living allowance (Variable Dearness Allowance), and potentially the value of concessions for essential commodities.

Therefore, option (b) is the correct answer.

(Other Source: clc.gov.in)

QUESTION 2

Consider the following statements:

Statement 1: The gross non-performing asset (NPA) ratio of public sector banks (PSBs)’ MSME loans had declined in 2024-25 from March 2022.

Statement 2: The fall in the gross NPA ratio was due to an increase in the loans extended to MSMEs as well as a fall in the absolute amount of bad loans.

Which one of the following is correct in respect of the above statements?

(a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

(b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1.

(c) Statement 1 is correct but Statement 2 is incorrect.

(d) Statement 1 is incorrect but Statement 2 is correct.

Explanation

— India’s public sector banks (PSBs) have been seeing a steady improvement in their MSME loan book – or loans given to Micro, Small, and Medium Enterprises – although credit extended to the smallest of these businesses has not witnessed a reduction in stress at the same rate, data shared by the finance ministry with the Parliament showed.

— The gross non-performing asset (NPA) ratio of PSBs’ MSME loans had declined to 6.18 per cent at the end of 2024-25 from 7.99 per cent a year ago and 12.8 per cent at the end of March 2022. Hence, statement 1 is correct.

— The fall in the gross NPA ratio was due to both, an increase in the loans extended to MSMEs as well as a fall in the absolute amount of bad loans. The gross NPA ratio is calculated by dividing the quantum of loans gone bad – loans that are not being paid back – by the total amount of loans outstanding. For instance, loans given by state-owned banks to MSMEs stood at Rs 13.07 lakh crore as on March 31, up 11.3 per cent year-on-year. At the same time, the value of these loans that had become non-performing – or were not being repaid – was down 14 per cent from a year ago at Rs 80,749 crore. Hence, statement 2 is correct.

Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1.

Therefore, option (a) is the correct answer.

QUESTION 3

The term “Quick commerce” refers to:

(a) Commercial activity done via social media platforms.

(b) Shopping directly via smart TVs or voice assistants like Alexa or Google Assistant.

(c) Transactions in virtual reality environments.

(d) Rapid delivery of goods ordered online.

Explanation

— Blinkit, the quick commerce (q-commerce) arm of technology firm Eternal Ltd, outpaced its food delivery unit Zomato in net order value in the first quarter (April-June) of 2025-26, the company reported this week.

— Quick commerce (q-commerce) refers to the rapid delivery of goods ordered online, usually between 10 minutes and 30 minutes.

— For q-commerce to work effectively, firms must invest in opening and efficiently stocking so-called “dark stores”, which are stocked like standard retail stores but are used only as storage and are not open to the public. Dark stores are critical working infrastructure that make expedited fulfillment feasible in the area of operation of the q-commerce firm.

— The three largest q-commerce companies in India — Blinkit, Zepto, and Swiggy Instamart — together receive approximately 4.3 million orders every day.

Therefore, option (d) is the correct answer.

QUESTION 4

With reference to the Indian rupee, consider the following statements:

1. A strong balance of payments position supports the stability of the rupee.

2. External factors, such as the performance of the US dollar, do not affect the value of the Indian rupee.

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

Explanation

— Reserve movements are driven by the country’s external balance of payments (BoP) transactions, including current and capital. Current account transactions primarily include the export and import of commodities and services. A good balance of payments situation helps the currency remain stable. Hence, statement 1 is correct.

— In terms of merchandise trade, India has always been a net importer. In 2023-24, its merchandise exports were $441.48 billion, far less than imports of $683.55 billion, resulting in a $242.07 billion trade imbalance.

— A free fall in the rupee’s value is primarily prevented by interventions from the Reserve Bank of India (RBI).

— External factors, such as the performance of the US dollar, also affect the value of the Indian rupee. Hence, statement 2 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 5

With reference to India and the EU trade deal, consider the following statements:

1. India has allowed 100 per cent FDI in telecom for the UK under the trade deal.

2. In the insurance sector, the FDI ceiling has been kept at 49 per cent.

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

Explanation

— In the first such offer made during trade deal negotiations, India is working on a “new chapter” aimed at extending long-term regulatory certainty in the domestic manufacturing sector to attract investment from the European Union (EU).

— This comes in the backdrop of shared concerns between India and the EU over Chinese overcapacity, which is viewed as a threat to domestic manufacturing of critical products such as pharmaceuticals, electronics and defence requirements, among others.

— This comes as India has begun seeking to attract investments from Western countries in exchange for lowering tariffs on key sectors. For instance, India has allowed 100 per cent FDI in telecom for the UK under the trade deal. In the insurance sector, the FDI ceiling has been kept at 74 per cent, providing investment certainty for UK insurers. A similar strategy was followed in the European Free Trade Association (EFTA) deal. Hence, statement 1 is correct and statement 2 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 6

Which of the following definitions are closely related to the concept of inflation?

(a) An increase in the supply of goods and services over time

(b) A situation where the overall price levels in an economy consistently fall, leading to decreased consumer spending and business investment

(c) A condition where prices increase uncontrollably, often by more than 50% per month, due to excessive supply of money in the economy, often triggered by political instability or the collapse of currency value

(d) A sustained increase in the general price level of goods and services in an economy

Explanation

— Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

— Consumers’ cost of living depends on the prices of many goods and services and the share of each in the household budget.

— The cost of this basket at a given time expressed relative to a base year is the consumer price index (CPI), and the percentage change in the CPI over a certain period is consumer price inflation, the most widely used measure of inflation.

— Central bankers are increasingly relying on their ability to influence inflation expectations as an inflation-reduction tool.

— Policymakers announce their intention to keep economic activity low temporarily to bring down inflation, hoping to influence expectations and contracts’ built-in inflation component.

— Inflation is the sustained increase in the general price level of goods and services in an economy over a period of time, resulting in a decline in the purchasing power of money.

Therefore, option (d) is the correct answer.

(Other Source: imf.org)

QUESTION 7

With reference to the Amrit Bharat Station Scheme, consider the following statements:

1. The scheme focuses on the holistic development of railway stations through long-term master planning.

2. It promotes incorporation of local culture and architecture in station design.

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

Explanation

— The recent introduction of the Amrit Bharat Station Scheme aims to enhance and modernize railway stations throughout the Indian Railways network.

— The scheme has a long-term vision for the ongoing development of stations. It involves creating Master Plans and executing them in phases to enhance various station facilities.

— These enhancements encompass bettering station accessibility, waiting areas, toilet facilities, lift and escalator installations as needed, cleanliness, offering free Wi-Fi, setting up kiosks for local products through initiatives like ‘One Station One Product’, enhancing passenger information systems, establishing Executive Lounges, designating spaces for business meetings, incorporating landscaping, and catering to the unique requirements of each station.

— Furthermore, the scheme emphasizes upgrading station structures, integrating stations with the surrounding city areas on both sides, promoting multimodal connectivity, providing facilities for individuals with disabilities (Divyangjans), implementing sustainable and eco-friendly solutions, introducing ballastless tracks, incorporating ‘Roof Plazas’ when required, and considering the feasibility and phasing of improvements.

— The ultimate goal is to transform these stations into vibrant city centres over the long term.

Therefore, option (c) is the correct answer.

QUESTION 8

Which of the following features is not associated with the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)?

(a) It is demand-driven and legally guarantees employment.

(b) It provides 100 days of wage employment to every urban household.

(c) It mandates payment of unemployment allowance if work is not provided within 15 days.

(c) The Electronic Fund Management System (e-FMS) is used to transfer wages

(d) It also promotes active participation of women in the workforce

Explanation

— MGNREGA provides a legal guarantee for 100 days of employment per year to every rural household in India.

— This ensures that eligible households have access to a minimum level of employment, helping alleviate poverty and providing a safety net during periods of economic distress.

—  MGNREGA is designed to be demand-driven, meaning that employment opportunities are created in response to the expressed demand from the rural community.

—  The beneficiaries have the right to demand work, and the government is obligated to provide employment within 15 days of such a demand.

—  Electronic Fund Management System (e-FMS) is employed to transfer wages directly to the bank accounts of the workers, reducing leakages and ensuring timely payments. This helps in minimizing corruption and improving the efficiency of the program.

—  The act promotes the active participation of women in the workforce. One-third of the beneficiaries are women, and efforts are made to ensure that at least 50% of the workers are women. This not only contributes to women’s empowerment but also addresses gender disparities in rural employment.

Therefore, option (b) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 119)

Daily subject-wise quiz — Polity and Governance (Week 121)

Daily subject-wise quiz —  Science and Technology (Week 121)

Daily subject-wise quiz — Economy (Week 120)

Daily subject-wise quiz — Environment and Geography (Week 120)

Daily subject-wise quiz – International Relations (Week 120)

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