UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Monetary Policy Committee, renewable energy in India and more (Week 131)

QUESTION 1

With reference to the Monetary Policy Committee (MPC), consider the following statements:

1. It is a three-member body formed under the RBI Act, 1947.

2. The Governor of the Reserve Bank of India is the Chairperson of the MPC.

3. The MPC is required to meet at least once a year.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— The Reserve Bank of India (RBI) Monetary Policy Committee is widely expected to keep the repo rate unchanged for the second consecutive time amid strong GDP growth and expectations of benign inflation.

— Section 45ZB of the modified RBI Act of 1934 establishes an empowered six-member monetary policy committee (MPC) to be appointed by the Central Government via announcement in the Official Gazette. Hence, statement 1 is not correct.

— The first such MPC was established on September 29, 2016.

— The Governor of the Reserve Bank of India is the Chairperson or ex officio of the MPC. Hence, statement 2 is correct.

— The MPC determines the policy repo rate required to achieve the inflation target.

— The MPC is required to meet at least four times a year. The quorum for the meeting of the MPC is four members. Hence, statement 3 is not correct.

— Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.

Therefore, option (a) is the correct answer.

(Other Source: rbi.org.in)

QUESTION 2

With reference to the tokenisation, consider the following statements:

1. It converts real-world assets into digital tokens on blockchain.

2. It offers new possibilities for the financial markets in expanding access and improving transparency.

3. In a step towards asset tokenisation, the Reserve Bank of India (RBI) has developed a Unified Markets Interface (UMI).

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— In a step towards asset tokenisation, the Reserve Bank of India (RBI) has developed a Unified Markets Interface (UMI), which is envisioned as a new next-generation financial market infrastructure, its Governor Sanjay Malhotra said. Hence, statement 2 is correct.

— Asset tokenisation converts real-world assets into digital tokens on blockchain, creating fractional ownership and global trading opportunities. It offers new possibilities for the financial markets in expanding access, improving transparency and enhancing settlement efficiency through smart contracts. Hence, statements 1 and 3 are correct.

— The Reserve Bank has conceptualised a Unified Markets Interface as a new next-generation financial market infrastructure. This interface will have the capability to tokenise financial assets and settlements using wholesale Central Bank Digital Currency (CBDC).

Therefore, option (c) is the correct answer.

QUESTION 3

With reference to renewable energy in India, consider the following statements:

1. Solar energy contributed the most to the year’s capacity expansion in FY 2024–25.

2. Wind energy witnessed a decline in FY 2024–25 compared to the previous year.

3. In bioenergy installations, the maximum energy has been produced from off-grid and waste-to-energy projects.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 1 only

(c) 2 and 3 only

(d) 1, 2 and 3

Explanation

— As of June 2025, India’s total installed capacity stood at 485 gigawatts (GW), of which renewables – including solar, wind, small hydro, and biogas – accounted for 185 GW, according to the Ministry of New and Renewable Energy.

— Solar energy contributed the most to the year’s capacity expansion, with 23.83 GW added in FY 2024–25, a significant increase over the 15.03 GW added in the previous year. Hence, statement 1 is correct.

— Wind energy also witnessed sustained progress during the year, with 4.15 GW of new capacity added, compared to 3.25 GW in FY 2023–24. The total cumulative installed wind capacity now stands at 50.04 GW, reinforcing wind energy’s role in India’s renewable energy mix. Hence, statement 2 is not correct.

— Bioenergy installations reached a total capacity of 11.58 GW, but only 0.53 GW from off-grid and waste-to-energy projects. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

(Other Source: http://www.pib.gov.in)

QUESTION 4

With reference to the recent railway projects approved by the Cabinet, consider the following statements:

1. Wardha-Bhusawal – Andhra Pradesh

2. Gondia-Dongargarh – Maharashtra-Chhattisgarh

3. Vadodara-Ratlam – Gujarat-Rajasthan

How many of the pairs given above are correct?

(a) Only one pair

(b) Only two pairs

(c) All three pairs

(d) None of the pair

Explanation

— The Union Cabinet approved the expansion of four key railway corridors totaling 894 km route length covering 18 districts across four states at a cost of Rs 24,634 crore.

— The projects approved by the Cabinet are:

(i) the 314-km Wardha-Bhusawal 3rd & 4th line in Maharashtra Hence, pair 1 is not correct.

(ii) the 84-km Gondia-Dongargarh 4th line in Maharashtra, Chhattisgarh Hence, pair 2 is correct.

(iii) the 259-km Vadodara-Ratlam 3rd & 4th line in Gujarat, Madhya Pradesh Hence, pair 3 is not correct.

(iv) the 237-km Itarsi-Bhopal-Bina 4th line in Madhya Pradesh.

— The routes will converge with the Golden Quadrilateral and Diagonals of the Indian Railways, consisting of six high-density routes. Together, they make up 16 per cent of the Indian Railways’ total network, but carry around 52 per cent of the railways’ overall passenger traffic and 58 percent of the total freight traffic.

Therefore, option (a) is the correct answer.

QUESTION 5

Marginal Standing Facility (MSF) Rate is defined as:

(a) rate at which banks can borrow on an overnight basis from the RBI

(b) rate at which banks deposit their excess funds with the RBI overnight

(c) rate at which the RBI lends long-term funds to the government

(d) rate at which the RBI provides short-term loans to mutual funds and NBFCs

Explanation

— The Marginal Standing Facility (MSF) Rate is the penal rate at which banks can borrow from the Reserve Bank overnight by drawing on their Statutory Liquidity Ratio (SLR) portfolio up to a specified ceiling of 2%.

— This serves as a safety valve against unexpected liquidity shocks to the banking sector. The MSF rate is set at 25 basis points above the policy repo rate.

Therefore, option (a) is the correct answer.

(Source: pib.gov.in)

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 125)

Daily subject-wise quiz — Polity and Governance (Week 131)

Daily subject-wise quiz —  Science and Technology (Week 131)

Daily subject-wise quiz — Economy (Week 130)

Daily subject-wise quiz — Environment and Geography (Week 130)

Daily subject-wise quiz – International Relations (Week 130)

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