UPSC Essentials | Daily subject-wise quiz : Economy MCQs on foreign exchange reserves management, National Household Income Survey and more (Week 135)

QUESTION 1

The basic parameters of the Reserve Bank’s policies for foreign exchange reserves management are:

1. Safety

2. Sustainability

3. Stability

4. Liquidity

5. Returns

Select the correct answer using the codes given below:

(a) 1, 2 and 3

(b) 3, 4 and 5

(c) 2, 3 and 4

(d) 1, 4 and 5

Explanation

— The Reserve Bank of India (RBI) is the custodian of the country’s foreign exchange reserves and is vested with the responsibility of managing their investment. The basic parameters of the Reserve Bank’s policies for foreign exchange reserves management are safety, liquidity and returns.

— The legal provisions governing management of foreign exchange reserves are laid down in the RBI Act, 1934. In brief, the law broadly permits the following investment categories:

a) deposits with other central banks and the BIS;

b) deposits with commercial banks overseas;

c) debt instruments representing sovereign/sovereign-guaranteed liability with residual maturity for the debt papers not exceeding 10 years;

d) other instruments / institutions as approved by the Central Board of the RBI in accordance with the provisions of the Act;

e) Investment, sale, purchase and deposits in gold; and

f) dealing in certain types of derivatives.

— While safety and liquidity continue to be the twin-pillars of reserves management, return optimisation has become an embedded strategy within this framework.

Therefore, option (d) is the correct answer.

(Source: rbi.org.in)

QUESTION 2

Consider the following statements:

1. It connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.

2. Around one-fifth of global liquid petroleum fuel consumption and global liquefied natural gas (LNG) trade transits through the strait.

3. India’s LNG imports from Qatar do not come through this Strait.

The above mentioned statements refer to which Strait?

(a) Strait of Malacca

(b) Bab-el-Mandeb Strait

(c) Strait of Hormuz

(d) Sunda Strait

Explanation

— The Strait of Hormuz is a narrow waterway between Iran and Oman that connects the Persian Gulf, the Gulf of Oman, and the Arabian Sea.

— The US Energy Information Administration (EIA) refers to it as the “world’s most important oil transit chokepoint,” with the strait handling around one-fifth of worldwide liquid petroleum fuel usage and liquefied natural gas (LNG) traffic.

— Much of India’s oil comes from significant West Asian sources such as Iraq, Saudi Arabia, and the UAE and is transported to Indian ports via the Strait of Hormuz. The majority of India’s LNG imports, which are primarily from Qatar, also pass through this critical choke point.

Therefore, option (c) is the correct answer.

QUESTION 3

‘Rosneft’ and ‘Lukoil’ were in the news. They are:

(a) Russian oil and gas companies

(b) Ukrainian defence companies

(c) Iranian shipping firms

(d) Chinese oil and gas companies

Explanation

— Russian oil dispatches to India have dropped sharply after the US announced sanctions on Moscow’s oil giants Rosneft and Lukoil on October 22, according to provisional tanker data. These are still early days and industry experts believe it would be a month or so to get a clear picture. But refiners seem wary of Washington’s latest sanctions, which are set to take effect from November 21.

— In the week to October 27, crude oil exports to India from Russia averaged 1.19 million barrels per day (bpd), significantly down from 1.95 million bpd in the previous two weeks, as per provisional vessel tracking data from global commodity data and analytics provider Kpler.

— As expected, the crash in exports is driven by lower dispatches from Rosneft and Lukoil, which account for over half of Russia’s oil production and exports, and used to make up over two-thirds of India’s Russian oil imports. Exports to India from Rosneft—Russia’s largest oil company—plunged to 0.81 million bpd in the week to October 27 from 1.41 million bpd in the previous week. For Lukoil, no dispatches to India were recorded in the week to October 27, as against 0.24 million bpd in the previous week.

Therefore, option (a) is the correct answer.

QUESTION 4

With reference to the Know Your Vehicle (KYV) system, consider the following statements:

1. In this system, it is mandatory for all FASTag users to submit their Registration Certificate (RC) and vehicle image.

2. It was implemented to prevent the leakages in the FASTag system.

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 a relief to vehicle owners, the National Highways Authority of India (NHAI) has simplified the Know Your Vehicle (KYV) process for FASTag users. The KYV process was implemented last year, in an attempt to prevent the leakages in the FASTag system, as some truck drivers were allegedly using the car tags to avoid paying high tolls. Hence, statement 2 is correct.

— In revised guidelines issued by Indian Highways Management Company Limited (IHMCL), an NHAI company, FASTag services will not be discontinued for non-compliant vehicles and users will be provided sufficient opportunity to complete the KYV process.

— Know your vehicle or KYV is a system where all FASTag users have to submit their Registration Certificate (RC) and vehicle image to ensure that the FASTag has been affixed to the correct vehicle. The whole process has to be repeated every three years to ensure no misuse. Hence, statement 1 is correct.

— The circular also states that the KYV process should also coincide with the OVOT (one-vehicle-one tag) mandate, which was made mandatory from October 31, 2024.

Therefore, option (c) is the correct answer.

QUESTION 5

The first ever, pan-India National Household Income Survey (NHIS) will be conducted by:

(a) Reserve Bank of India

(b) NITI Aayog

(c) Ministry of Statistics and Programme Implementation

(d) Ministry of Finance

Explanation

— The first ever, pan-India National Household Income Survey (NHIS), slated to begin in February, may be one of the “toughest” surveys the Ministry of Statistics and Programme Implementation (MoSPI) has done and key to its success will be raising public awareness and gaining their confidence, MoSPI Secretary Saurabh Garg told The Indian Express.

— The NHIS is set to be launched in February 2026 and its results should be available by the middle of 2027.

— Past efforts to measure incomes of Indian households have not led to pilot surveys translating into nationwide surveys on income distribution due to difficulties in collecting reliable income data, with some even showing income levels to be lower than the sum of consumption and savings.

— Household surveys on their incomes are notoriously difficult on account of people’s hesitancy to divulge information on the money they earn from various sources. Earlier attempts to conduct income surveys date back to the 1950s, when the government tried to collect information on income as part of its consumer expenditure surveys on an experimental basis.

— MoSPI has constituted a Technical Expert Group (TEG) under the chairmanship of Surjit S Bhalla, Former Executive Director of India, International Monetary Fund. Apart from overseeing the survey exercise, the Expert Group will also “provide guidance for finalisation of the survey results and report for release”.

Therefore, option (c) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 129 and 130)

Daily subject-wise quiz — Polity and Governance (Week 135)

Daily subject-wise quiz —  Science and Technology (Week 134)

Daily subject-wise quiz — Economy (Week 134)

Daily subject-wise quiz — Environment and Geography (Week 134)

Daily subject-wise quiz – International Relations (Week 134)

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