UPSC Essentials | Daily subject-wise quiz : Economy MCQs on trade through the Suez Canal, Foreign Direct Investment and more (Week 129)

QUESTION 1

Which of the following indirect taxes were subsumed in Goods and Services Tax (GST)?

1. Central Excise Duty

2. Entertainment Tax (other than the tax levied by local bodies)

3. Advertisement Tax

4. Basic Customs Duty

5. Electricity Duty

6. Special Additional Duty of Customs

Select the correct answer using the codes given below:

(a) 1, 2, 3 and 6

(b) 1, 3, 5 and 6

(c) 2, 4, 5 and 6

(d) All of the above

Explanation

— The GST regime, rolled out in July 2017, subsumed 17 indirect taxes and 13 cesses, has seen over a dozen rounds of rate tweaks so far. But this round of reforms focused on a major restructuring of GST slabs. The multiple slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent – were replaced with a broad two-slab structure – a merit rate of 5 per cent and a standard rate of 18 per cent – in addition to a special demerit rate of 40 per cent for sin and demerit goods such as pan masala, tobacco and cigarettes.

— Some of the indirect taxes which were subsumed are: Central Excise Duty, Additional Excise Duties, Additional Customs Duty (CVD – Countervailing Duty), Special Additional Duty of Customs (SAD), Central Surcharges (relating to supply of goods and services), Entertainment Tax (other than the tax levied by local bodies), Luxury Tax, State Cesses and Surcharges (in so far as they relate to supply of goods and services), Advertisement Tax.

— Basic Customs Duty (BCD) – still levied on imports, while the Electricity Duty continues to be levied by states.

Therefore, option (a) is the correct answer.

QUESTION 2

What is the correct order of these states/UTs (from high to low) in terms of Foreign Direct Investment (FDI) inflows in FY 2024–25?

1. Karnataka

2. Delhi

3. Maharashtra

Select the correct answer using the codes given below:

(a) 2—3—1

(b) 3—1—2

(c) 3—2—1

(d) 2—1—3

Explanation

— Foreign Direct Investment (FDI) into the country had risen to the highest in over four years in July, according to data released by the Reserve Bank of India (RBI). At $11.11 billion, the gross FDI inflow in July was the highest since May 2021, when $12.32 billion had come into the country on a gross basis.

— India is also becoming a hub for manufacturing FDI, which grew by 18% in FY 2024–25, reaching USD 19.04 billion compared to USD 16.12 billion in FY 2023–24.

— Maharashtra accounted for the highest share (39%) of total FDI equity inflows in FY 2024–25, followed by Karnataka (13%) and Delhi (12%). Among source countries, Singapore led with 30% share, followed by Mauritius (17%) and the United States (11%).

Therefore, option (b) is the correct answer.

(Other Source: pib.gov.in)

QUESTION 3

With reference to the Global Gateway, consider the following statements:

1. It is the European Union’s initiative to narrow the global investment gap worldwide.

2. It is aligned with the UN’s Agenda 2030 and its Sustainable Development Goals.

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

— EU is committed to scaling up investments in India through ‘Global Gateway’, by de-risking private-sector investment with guarantees and blended finance.

— Global Gateway is the European Union’s strategy to boost smart, clean and secure connections in digital, energy and transport sectors, and to strengthen health, education and research systems across the world.

— The Global Gateway is the EU’s contribution to narrowing the global investment gap worldwide. Hence, statement 1 is correct.

— The Global Gateway is also fully aligned with the UN’s Agenda 2030 and its Sustainable Development Goals, as well as the Paris Agreement. Hence, statement 2 is correct.

— The Team Europe Global Gateway investment portfolio in India already exceeds €15 billion, spanning sectors such as renewable energy, water, urban transport and digital infrastructure.

Therefore, option (c) is the correct answer.

(Other Source: commission.europa.eu)

QUESTION 4

With reference to the Gross Domestic Product (GDP), consider the following statements:

1. It is the central metric to assess the annual economic growth or the overall size of an economy.

2. The Ministry of Statistics and Programme Implementation regulates and updates the base year for the calculation of GDP.

3. At present, the base year used for the GDP calculations is 2019-20.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Ministry of Statistics and Programme Implementation stated that the ministry is in the process of revising the “base year” for the calculation of Gross Domestic Product (GDP). Hence, statement 2 is correct.

— The GDP is the central metric to assess the annual economic growth or the overall size of an economy and the so-called “base year” refers to the year that works as a starting point for calculations. Hence, statement 1 is correct.

— Currently, the base year is 2011-12. In other words, the GDP in 2011-12 serves as a “base” from which the GDP growth of every subsequent year is measured. The new base year for GDP estimates will be 2022-23, with the revised set of data to be released on February 27, 2026. Hence, statement 3 is not correct.

— The base year for the Index of Industrial Production (IIP) will be amended to 2022-23, while the base year for the Consumer Price Index, which is used to monitor consumer inflation, will be revised to 2023-24.

Therefore, option (b) is the correct answer.

QUESTION 5

With reference to the trade through the Suez Canal, consider the following statements:

1. In 2024-25, the Suez Canal’s daily transit trade increased compared to 2023-24.

2. It accounts for more than half of the global energy flows.

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

— Egypt’s Suez Canal Authority (SCA) is offering a 15 per cent discount on transit fee to cargo ships of minimum 130,000 mt capacity, underscoring the impact that the Red Sea security crisis has had on the waterway critical to the shortest maritime route to the Mediterranean Sea and beyond from the Arab Peninsula, North-East Africa, and the Arabian Sea.

— According to IMF data, the Suez Canal accounts for approximately 12-15% of global trade. Prior to the Houthi strikes, the Suez Canal handled about 30% of all worldwide container traffic. It is also a critical route for 8-9 percent of world energy flows. Hence, statement 2 is not correct.

— According to data from PortWatch, a live conflict tracker maintained by the IMF and Oxford University, the Suez Canal’s daily transit trade volume (TTV) was 484,137 mt on May 11, 2025, compared to 1,349,086 mt the previous year. TTV refers to the total volume of goods transported along a shipping route. Hence, statement 1 is not correct.

— Shipping prices in the Suez Canal region increased by 180 percent over the time under review. India, like many other countries, relied primarily on the Red Sea shipping route for exports to Europe, with the Suez Canal handling approximately 80% of the quantities.

Therefore, option (d) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 124)

Daily subject-wise quiz — Polity and Governance (Week 129)

Daily subject-wise quiz —  Science and Technology (Week 129)

Daily subject-wise quiz — Economy (Week 128)

Daily subject-wise quiz — Environment and Geography (Week 128)

Daily subject-wise quiz – International Relations (Week 128)

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