UPSC Essentials | Daily subject-wise quiz : Economy MCQs on trade between India and New Zealand, Statutory Liquidity Ratio and more (Week 142)

2. It was launched in 2018.

3. The capacity of the solar parks shall be 1000 MW and above.

4. These parks are proposed to be set up by 2025-26.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) Only three

(d) All four

Explanation

— Of the 55 solar parks approved under the ‘Development of Solar Parks and Ultra-Mega Solar Power Projects’ scheme, 33 have been developed or are currently under development through partnerships between Central Public Sector Undertakings (CPSUs) and state governments in order to ease land identification and acquisition process. These 33 parks together account for a cumulative capacity of 20.7 GW, according to information shared by the Union Ministry of New and Renewable Energy (MNRE).

— These projects have come up under the “Development of Solar Parks and Ultra-Mega Solar Power Projects” scheme, which encourages states and Union Territories to prioritise government-owned waste or non-agricultural land for setting up solar parks. Hence, statement 1 is correct.

— Launched in 2014, the scheme has approved 55 parks with a combined sanctioned capacity of nearly 40 GW across 13 states till October this year. Of this, around 14.9 GW has already been installed, while the remaining capacity is at various stages of implementation. Hence, statement 2 is not correct.

— The capacity of the solar parks shall be 500 MW and above. Hence, statement 3 is not correct.

— These parks are proposed to be set up by 2025-26. Hence, statement 4 is correct.

Therefore, option (b) is the correct answer.

(Other Source: mnre.gov.in)

QUESTION 2

Which of the following is/are required for carry trade?

1. Interest rate differential

2. Currency stability

Select the correct answer using the codes given below:

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Explanation

— A carry trade involves borrowing at a low interest rate and investing in an asset with a higher rate of return.

— Carry trades thrive under two conditions: a significant interest rate differential and currency stability. Hence, both 1 and 2 are correct.

— It is most recognised for its application in foreign exchange (forex or FX) markets, when traders borrow in a low-interest currency and invest in higher-yielding assets denominated in another currency.

Therefore, option (c) is the correct answer.

(Other Source: http://www.investopedia.com)

QUESTION 3

Open Market Operations (OMOs) are the market operations conducted by the RBI in which:

(a) It sells/purchases securities to/from the market to adjust the rupee liquidity conditions.

(b) It fixes the repo and reverse repo rates to influence short-term interest rates.

(c) It directly lends funds to commercial banks against collateral for overnight needs.

(d) It regulates foreign exchange rates by buying and selling foreign currencies in the spot market.

Explanation

— The Reserve Bank of India (RBI) has decided to inject liquidity worth Rs 290,000 crore ($32 billion) into the banking system via purchase auction of government securities and buy-sell swap auction in the next one month.

— According to the RBI, it has planned open market operation (OMO) purchase auctions of Government of India securities for an aggregate amount of Rs 200,000 crore in four tranches of Rs 50,000 crore each to be held on December 29, January 5, 2026, January 12, 2026 and January 22, 2026.

— OMOs are the market operations conducted by the RBI by way of sale/ purchase of G-Secs to/ from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. When the RBI feels that there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity. Similarly, when the liquidity conditions are tight, RBI may buy securities from the market, thereby releasing liquidity into the market.

Therefore, option (a) is the correct answer.

(Other Source: http://www.rbi.org.in)

QUESTION 4

With reference to the trade between India and New Zealand, consider the following statements:

1. The bilateral trade between the countries has consistently increased from 2021-22 to 2024-25.

2. India and New Zealand have signed a free trade agreement, which aims to double bilateral trade in the coming 5 years.

3. In the last four years, India has had a trade deficit with New Zealand.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— India and New Zealand announced the conclusion of negotiations on a free trade agreement. Bilateral trade between the countries in 2024-25 was $1.3 billion.

— The India-NZ partnership is going to scale newer heights. The FTA sets the stage for doubling bilateral trade in the coming 5 years. Hence, statement 2 is correct.

— The trade did not rise every single year — it dipped in 2023-24 compared to 2022-23 and then increased in 2024-25. Hence, statement 1 is not correct.

— Recent data show India has had a trade surplus with New Zealand in merchandise trade in recent years. Hence, statement 3 is not correct.

— The FTA removes numerical caps on Indian students, guarantees a minimum of 20 hours per week work during study, and provides extended post-study work opportunities-up to three years for STEM Bachelor’s and Master’s graduates, and up to four years for Doctorate holders-creating clear pathways for skills development and global careers, the ministry said. “For the first time with any country, New Zealand has created a dedicated pathway for student mobility and post-study work visas with India,” the Commerce and Industry Ministry said.

Therefore, option (a) is the correct answer.

QUESTION 5

Which of the following banks are required to maintain a Statutory Liquidity Ratio (SLR)?

1. Primary (Urban) Co-operative Banks (UCBs)

2. State Co-operative Banks (SCBs)

3. District Central Co-operative Banks (DCCBs)

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1 only

(c) 2 and 3 only

(d) 1, 2 and 3

Explanation

— As per the Section 24 (2A) of the Banking Regulation Act 1949, (as applicable to co-operative societies) provides that every primary (urban) cooperative bank shall maintain liquid assets, the value of which shall not be less than such percentage as may be specified by Reserve Bank in the Official Gazette from time to time and not exceeding 40% of its DTL in India as on the last Friday of the second preceding fortnight (in addition to the minimum cash reserve ratio (CRR) requirement). Such liquid assets shall be in the form of cash, gold or unencumbered investment in approved securities. This is referred to as the Statutory Liquidity Ratio (SLR) requirement.

— As per Section 24 of the Banking Regulation Act 1949, the State Co-operative Banks (SCBs) and the District Central Co-operative Banks (DCCBs) are required to maintain assets as part of the SLR requirement in cash, gold or unencumbered investment in approved securities the value of which shall not, at the close of business on any day, be less than such per cent, as prescribed by RBI, of its total net demand and time liabilities. DCCBs are allowed to meet their SLR requirement by maintaining cash balances with their respective State Co-operative Bank.

Therefore, option (d) is the correct answer.

(Source: http://www.rbi.org.in)

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 136-137)

Daily subject-wise quiz — Polity and Governance (Week 142)

Daily subject-wise quiz —  Science and Technology (Week 142)

Daily subject-wise quiz — Economy (Week 141)

Daily subject-wise quiz — Environment and Geography (Week 141)

Daily subject-wise quiz – International Relations (Week 141)

Subscribe to our UPSC newsletter and stay updated with the news cues from the past week.

Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.