UPSC Essentials | Daily subject-wise quiz : Economy MCQs on India’s electronic sector, National Monetisation Pipeline 2.0 and more (Week 151)

2. The electronics sector is India’s second-largest export sector.

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

Relevance: India’s electronics sector is closely linked to trade deficit trends, supply chain dependence on China, and the Production Linked Incentive (PLI) scheme. Questions may test knowledge of sector-wise export rankings and import composition.

Explanation

— The conclusion of long-awaited free trade agreements (FTAs) with the European Union and the United States in recent weeks is set to open a vast export market, particularly for India’s fast-growing electronics sector. This market could act as an industrial catalyst for the economy at large, including manufacturing.

— Electronics is today India’s second-largest export sector. NITI Aayog’s trade watch quarterly report, released last week, said that the US and the EU together have a combined market size of approximately $1.6 trillion — representing about a third of the total global electronics demand. Hence, statement 2 is correct.

— The NITI Aayog said that Europe’s strong import demand and India’s comparative advantage in electronics indicate a high degree of alignment. India’s exports to the EU across six key electronic products categories total $8.88 bn, against an export opportunity of nearly $336 billion in the EU market.

— The electronics manufacturing sector, concentrated in states like Tamil Nadu, Karnataka, Uttar Pradesh and Maharashtra, currently employs more than two million workers directly. The sector supports a network of component suppliers, assemblers and technology service providers.

— India and the EU resolved their WTO dispute during the FTA negotiations. The details of the resolution could be available when the deal is officially signed, the dispute was a major irritant for India-EU electronics trade. Brussels had dragged New Delhi into the World Trade Organisation’s (WTO) dispute settlement mechanism in 2019, challenging its levy of import duty on a wide range of ICT products, arguing that the duty was inconsistent with global trade norms and was hurting €600 million of its tech exports to India.

— India remains heavily import-dependent for components such as semiconductors or chips, integrated circuits, batteries, and displays. In the financial year 2023-24, India imported electronic components worth over $12 billion from China and $6 billion from Hong Kong. Imports from these two destinations alone accounted for more than half of total such imports to India. Hence, statement 1 is correct.

— A comparative analysis shows that while India is competitive in the mobile phones, telecom equipment and power electronics segments, it remains marginal in high-value, technology-intensive components that anchor global value chains, the report said.

Therefore, option (c) is the correct answer.

QUESTION 2

With reference to the National Monetisation Pipeline 2.0 (NMP 2.0), consider the following statements:

1. It has been developed by the RBI.

2. This phase of the pipeline is based on the mandate for Asset Monetisation Plan 2025-30.

3. It aims to increase the fiscal deficit to finance infrastructure.

4. It only includes monetisation of assets in the power and railway sectors.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) Only three

(d) All four

Relevance: The National Monetisation Pipeline (NMP 2.0) is relevant for UPSC Prelims as it reflects the government’s strategy of asset monetisation and infrastructure financing. It links with themes of fiscal consolidation, public–private partnerships (PPP), and capital recycling. Questions may test clarity between monetisation and privatisation, and understanding of brownfield vs. greenfield assets.

Explanation

— Finance Minister Nirmala Sitharaman launched the National Monetisation Pipeline 2.0 (NMP 2.0), with proceeds from asset monetisation seen at Rs 16.72 lakh crore over the five years that started April 2025. Developed by the Niti Aayog, the government’s top think-tank, the second phase of the pipeline is based on the mandate for ‘Asset Monetisation Plan 2025-30’ announced in the Union Budget for 2025-26 last year, but exceeds the figure of Rs 10 lakh crore that was then mentioned. Hence, statement 1 is not correct and statement 2 is correct.

— The first phase of the pipeline – which looks to unlock value from underutilised public infrastructure assets through transfer of assets for a limited period, divestment of portions of listed entities, securitisation of cash flows, or strategic commercial auctions – was launched in 2021. The Niti Aayog noted in its report on NMP 2.0 that NMP 1.0 had shown that monetisation projects had led to greater involvement of institutional investors such as pension and sovereign wealth funds in the development of India’s infrastructure.

— The second phase of the pipeline covers the five years starting 2025-26, with the overall asset monetisation potential figure of Rs 16.72 lakh crore inclusive of private investments worth Rs 5.8 lakh crore, the government said.

— NMP 2.0 aligns with the infrastructure development plans of the Viksit Bharat initiative. It aims to contribute to accelerated infrastructure development through upgrading and expansion of transportation networks, including highways, railways, ports and airports, along with other sectors.

— PPPs are an important mode of monetisation under NMP 2.0 and are expected to play a significant role by improving public sector efficiency and service quality, reducing public debt through capital recycling and attracting private sector investment.

— NMP 2.0 identifies assets in different industries, including highways, ports, mining, coal, civil aviation, telecom, logistics, and urban infrastructure. Hence, statement 4 is not correct.

— Asset monetisation under NMP 2.0 aims to liberate capital without worsening the government fiscal deficit by leveraging private investment and recycling cash for new infrastructure projects. Hence, statement 3 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 3

The Private Final Consumption Expenditure (PFCE) is:

(a) the total expenditure incurred by the Government on subsidies and welfare schemes.

(b) the total expenditure by resident and non-resident individuals on financial assets and real estate within the domestic territory.

(c) the value of all intermediate goods consumed in the production process within a country.

(d) the total money spent by households and Non-Profit Institutions Serving Households on goods and services for final consumption.

Relevance: Private Final Consumption Expenditure (PFCE) is a key component of GDP under the expenditure method. It is important for understanding trends in domestic demand, economic growth, and national income accounting. Recent discussions on consumption slowdown or growth make the concept examination-relevant.

Explanation

— The Ministry of Statistics and Programme Implementation (MoSPI) will not use Unified Payments Interface (UPI) transaction data to calculate India’s GDP in the new revised series that will be released this week due to the numbers being unstable and certain payment categories being too broad.

— Proposed as one of the non-traditional sources of data that could be used as an alternative indicator in the estimation of Private Final Consumption Expenditure (PFCE)– one of the key components of GDP when it is calculated from the expenditure side of economic activities– for quarterly GDP figures, a sub-committee of the statistics ministry’s Advisory Committee on National Accounts Statistics (ACNAS) has said it is too soon to use UPI transaction data.

— The Private final consumption expenditure (PFCE) is defined as the expenditure incurred by the resident households and non-profit institutions serving households (NPISH) on final consumption of goods and services, whether made within or outside the economic territory.

Therefore, option (d) is the correct answer.

(Other Source: mospi.gov.in)

QUESTION 4

Consider the following statements:

1. India’s holdings in US securities have increased in calendar year 2025.

2. India is the second largest holder of US Treasuries after Canada.

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

Relevance: India’s holdings of US Treasuries are linked to foreign exchange reserves management by the RBI. Questions can test understanding of global capital flows, current account dynamics, and reserve diversification. Such topics frequently appear under the economy and external sector in Prelims.

Explanation

— Amid trade tensions with America several months now, India has reduced its exposure to US Treasuries in calendar year 2025 (CY25), signalling a cautious shift in the country’s foreign exchange reserve strategy. According to US Department of Treasury data, India’s holdings in US securities have come down by $42.8 billion, or 18.96%, from $225.7 billion in January 2025 to $182.9 billion as of December 31, 2025. Hence, statement 1 is not correct.

— India, which is now the 15th largest holder of US Treasuries, had held $247.2 billion in September 2024, before cutting down gradually over the last several months. In December alone, India’s holding had come down by $3.6 billion. Hence, statement 2 is not correct.

— India’s investment in American securities technically means it is lending money to the US government indirectly. As the US government needs money to fund spending in the case of defence, healthcare, infrastructure, among other heads, it issues Treasury securities and countries like India buy them. That money goes into the US government’s financing pool.

— Significantly, China has also reduced its US Treasury holding from $760.8 billion to $683.5 billion during CY25. However, Japan, the largest holder of US securities, increased its holding from $1,079.3 billion to $1,185.5 billion. The UK increased its holdings of US Treasuries from $740.2 billion to $866 billion, as per US Treasury Department TIC data.

Therefore, option (d) is the correct answer.

QUESTION 5

The ‘Global AI Impact Commons’ is a:

(a) legally binding multilateral treaty under the United Nations to regulate the development of Artificial Intelligence technologies.

(b) voluntary initiative that provides a practical platform to encourage and enable AI adoption.

(c) global financial fund established by the World Bank to finance AI infrastructure in developing countries.

(d) certification mechanism that mandates ethical compliance standards for all AI-based products traded internationally.

Relevance: The ‘Global AI Impact Commons’ is relevant in the context of global AI governance and responsible AI adoption. UPSC may test awareness of emerging multilateral or voluntary digital initiatives. It links to themes of technology diplomacy, digital public goods, and India’s role in shaping global AI norms.

Explanation

— From a charter on “democratic diffusion” of artificial intelligence (AI) to pool shared resources, to a voluntary network of scientific institutions to connect those researching on AI around the world, 88 countries and international organisations, including the United States, China, France, Australia and the UK, signed the ‘New Delhi Declaration on AI Impact’ — the key outcome document of the five-day India AI Impact Summit.

— This marks a diplomatic victory for India, as it managed to convince a wide range of countries to endorse the declaration. At the AI Action Summit in Paris last year, the US and the UK had declined to sign the declaration, with the former flagging Europe’s regulatory approach towards AI as an issue.

(PTI Photo)

— Signatories have also taken note of the “Global AI Impact Commons” as a voluntary initiative that provides a practical platform to encourage and enable the adoption, replication, and scale-up of successful AI use cases across regions.

Therefore, option (b) is the correct answer.

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 146)

Daily subject-wise quiz — Polity and Governance (Week 151)

Daily subject-wise quiz —  Science and Technology (Week 151)

Daily subject-wise quiz — Economy (Week 150)

Daily subject-wise quiz — Environment and Geography (Week 150)

Daily subject-wise quiz – International Relations (Week 150)

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