UPSC Essentials | Daily subject-wise quiz : Economy MCQs on digital rupee, The India Employment Report 2024, UDGAM portal and more (Week 96, 97 and 98)

QUESTION 1

With reference to the Cooperative Banks, consider the following statements:

1. These banks, till 1996, were allowed to lend money only for non-agricultural purposes.

2. The RBI can impose restrictions on the cooperative banks due to concerns over their financial stability.

3. The RBI does not have the power to supersede the bank’s board of directors.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Explanation

— Hitesh Mehta, former general manager and head of accounting of the city-based New India Cooperative Bank, was detained last week by the Mumbai Police’s Economic Offence Wing (EOW) for allegedly syphoning Rs 122 crore from the safe.

— The Reserve Bank of India (RBI) then banned withdrawals from the bank, resulting in depositors queuing for their money.

— The FIR was filed under Sections 316(5) (criminal breach of trust by a public officer or banker, merchant, broker, attorney, or agent) and 61(2) (criminal conspiracy) of the Bharatiya Nyaya Sanhita (BNS).

— The RBI imposed limitations on the bank because of worries about its financial stability. These limits include forbidding the bank from making new loans, making investments, borrowing funds, or permitting withdrawals for six months, beginning at the close of business on February 13. Hence, statement 2 is correct.

— Additionally, the RBI has superseded the bank’s board of directors for a 12-month period due to “poor governance standards.” Hence, statement 3 is not correct.

— Urban Co-operative Banks (UCBs), while not technically defined, are primary cooperative banks located in urban and semi-urban areas. Until 1996, these banks were only allowed to lend money for non-agricultural reasons. Hence, statement 1 is correct.

Therefore, option (b) is the correct answer.

QUESTION 2

With reference to the deposit insurance, consider the following statements:

1. The objective of the Deposit Insurance and Credit Guarantee Corporation (DICGC) is to protect “small depositors” from the risk of losing their savings in case of a bank failure.

2. The insurance cover of Rs 2 lakh per depositor is for all accounts held by the depositor in all branches of the insured bank.

3. The DICGC insures only commercial banks including branches of foreign banks functioning in India and does not insure regional rural banks.

4. Only savings account deposits are insured by the DICGC.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) Only three

(d) All four

Explanation

— The government is mulling raising the insurance protection for bank accounts above the present maximum of Rs 5 lakh, according to Financial Services Secretary M Nagaraju.

— Deposit insurance is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a specialised branch of the Reserve Bank of India.

About DICGC

— The DICGC aims to safeguard “small depositors” from the risk of losing their savings in the event of a bank failure. Hence, statement 1 is correct.

— The insurance cover of Rs 5 lakh per depositor applies to all accounts held by the depositor at all branches of the insured bank. Hence, statement 2 is not correct.

— The DICGC insures all commercial banks, including foreign bank branches in India, local area banks, regional rural banks, and cooperative banks. However, the DICGC does not cover primary cooperative societies. Hence, statement 3 is not correct.

— Savings, fixed, current, and recurring deposits are all protected. The DICGC does not insure deposits made by foreign, central, or state governments, as well as interbank deposits. Hence, statement 4 is not correct.

Therefore, option (a) is the correct answer.

QUESTION 3

Consider the following statements about green bonds:

1. These are debt instruments issued by corporations and multilateral banks.

2. These bonds raise funds for projects that reduce emissions or enhance climate resilience.

3. Investors in green bonds often seek unstable and short-term returns.

Which of the statements given above is/are correct?

(a) 2 only

(b) 1 and 2 only

(c) 2 and 3 only

(d) 1, 2 and 3

Explanation

— Green bonds are debt instruments issued by governments, corporations, and multilateral banks to raise funds for projects that reduce emissions or enhance climate resilience. Hence, statements 1 and 2 are correct.

— Issuers typically offer green bonds at lower yields than conventional bonds, assuring investors that the proceeds will be used exclusively for green investments.

— The cost advantage of green bonds is determined by the difference in yield, often known as the green premium or greenium. A higher greenium helps issuers to raise capital at a lower cost, making green ventures more appealing.

— Investors in green bonds frequently want stable, long-term returns and may have internal or external mandates to devote a portion of their money to green financing. Despite their potential, green bonds make up a modest portion of the debt market and overall climate financing, as governments improve reporting processes and offer incentives to entice investors. Hence, statement 3 is not correct.

Therefore, option (b) is the correct answer.

QUESTION 4

With reference to the makhana (fox nut), consider the following statements:

1. It is the dried edible seed of the prickly water lily.

2. It can grow in both freshwater ponds and salty water ponds.

3. In 2022, ‘Mithila Makhana’ was conferred a Geographical Indication (GI) tag.

4. A Makhana Board will be established in Telangana announced during the Union Budget 2025-26.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) Only three

(d) All four

Explanation

— Union Finance Minister Nirmala Sitharaman announced during the presentation of the Union Budget that a “Makhana Board” would be established in Bihar. Hence, statement 4 is not correct.

— In 2022, ‘Mithila Makhana’ received a Geographical Indication (GI) tag, which indicates that a product can only be grown in a specific geographical place. Hence, statement 3 is correct.

— However, due to low productivity, a lack of food processing equipment, and the delayed emergence of effective marketing channels, Bihar, India’s largest producer of makhana, has been unable to capitalise on rising local and worldwide demand.

— Makhana, also known as fox nut, is the dried edible seed of the prickly water lily or gorgon plant (Euryale ferox), a species found in freshwater ponds throughout South and East Asia. Hence, statement 1 is correct and statement 2 is not correct.

— The plant is distinguished by its violet and white blooms, as well as its huge, spherical and thorny leaves, which can reach more than a metre in width.

— Bihar supplies around 90% of India’s makhana output. According to a 2020 article published by the Indian Council of Agricultural Research, the makhana crop is farmed on over 15,000 hectares in Bihar, producing nearly 10,000 tonnes of popped makhana.

Therefore, option (b) is the correct answer.

QUESTION 5

Which of the following have been identified as the areas of focus under the Make in India initiative?

1. Enhancing ease and cost of doing business

2. Manufacturing quality products

3. Availability of technology

4. Vibrant and dynamic MSME sector

Select the correct answer using the codes given below:

(a) 1 and 2 only

(b) 1, 3 and 4

(c) 2 and 4

(d) 1, 2, 3 and 4

Explanation

— While presenting the Union Budget, Finance Minister Nirmala Sitharaman stated that ‘Make in India’ is one of the government’s ten key areas of concentration for the coming year.

— ‘Make in India’ was launched in 2014 with the sole purpose of increasing indigenous production. According to their website, the purpose is to “facilitate investment, foster innovation, enhance skill development, protect intellectual property, and build best-in-class manufacturing infrastructure”.

— These goals will be fulfilled by “entering new processes, building new infrastructure, entering new manufacturing sectors, and providing a new ‘mindset’ of public-private partnership” .

— The mission has identified the following areas of focus:

(i) Enhancing ease and cost of doing business;

(ii) Building a future-ready workforce for in-demand jobs;

(iii) A vibrant and dynamic MSME sector;

(iv) Ensuring availability of technology; and

(v) Manufacturing quality products.

Therefore, option (d) is the correct answer.

QUESTION 6

Consider the following statements in respect of the digital rupee:

1. It is a sovereign currency issued by the Reserve Bank of India in alignment with its monetary policy.

2. It appears as a liability on the RBI’s balance sheet.

3. It is insured against inflation by its very design.

4. It is freely convertible against commercial bank money and cash.

Which of the statements given above are correct? (UPSC 2024)

(a) 1 and 2 only

(b) 1 and 3 only

(c) 2 and 4 only

(d) 1, 2 and 4

Explanation

— The Central Bank Digital Currency (CBDC) — digital rupee or e-rupee (e₹) is a legal tender issued by the RBI in digital form. Hence, statement 1 is correct.

— It is identical to the fiat currency and can be exchanged 1:1. Only its form differs from that of actual cash, which is made of paper (or polymer). Hence, statement 4 is correct.

— It is a fungible legal money that does not need holders to have a bank account. CBDC will be recorded as a ‘liability’ (currency in circulation) on the RBI’s balance sheet. Hence, statement 2 is correct.

— E-rupees will be issued in the same denominations as paper currency and coins and distributed through intermediaries, i.e. banks. Transactions will be processed through a digital wallet provided by the participating banks and kept on mobile phones and gadgets. It is not insured against inflation. Hence, statement 3 is not correct.

— Transactions can be either person-to-person (P2P) or person-to-merchant. QR codes will be provided for P2M transactions (such as shopping), there will be QR codes at the merchant’s location.

— A user will be able to withdraw digital tokens from banks in the same way that she presently withdraws actual cash. She will be able to store her digital tokens in the wallet, spend them online or in person, or transfer them via an app.

— CBDC is intended for restricted access to specific financial institutions. It has the potential to transform the settlement systems for financial transactions conducted by banks in the government securities (G-Sec) segment and the interbank market, as well as make the capital market more efficient and secure in terms of operational costs, collateral use, and liquidity management.

— CBDC has the potential to bring major benefits, including reduced reliance on cash, increased seigniorage due to lower transaction costs, and reduced settlement risk.

Therefore, option (d) is the correct answer.

QUESTION 7

With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of: (UPSC 2024)

(a) Bond market

(b) Forex market

(c) Money market

(d) Stock market

Explanation

— The G-Secs market primarily caters to long-term investors, whereas the money market offers short-term investment opportunities.

— Money market transactions are typically used to fund transactions in other markets, including the G-Secs market, and to address short-term liquidity shortages.

— Money markets have a maximum tenor of one year. Within one year, depending on the tenors, the money market is divided into:

i. Overnight market – The tenor of transactions is one working day.

ii. Notice money market – The tenor of the transactions is from 2 days to 14 days.

iii. Term money market – The tenor of the transactions is from 15 days to one year.

— Money market instruments include call money, repos, T- Bills, Cash Management Bills, Commercial Paper, Certificate of Deposit and Collateralized Borrowing and Lending Obligations (CBLO).

Therefore, option (c) is the correct answer.

(Source: rbi.gov.in)

QUESTION 8

This IMF facility offers quick concessional financial aid to low-income countries (LICs) facing urgent balance of payments issues operating under the Poverty Reduction and Growth Trust (PRGT), providing flexible support, especially during crises. Identify the financial facility.

(a) Multitranche financing facility

(b) Global Concessional Financing Facility

(c) Rapid Credit Facility

(d) None of the above

Explanation

According to http://www.imf.org,

— “The Rapid Credit Facility (RCF) provides fast concessional financial assistance to low-income countries (LICs) facing an urgent balance of payments need. The RCF is one of the facilities under the Poverty Reduction and Growth Trust (PRGT) that provide flexible financial support tailored to the diverse needs of LICs, including in times of crisis.”

Therefore, option (c) is the correct answer.

(Source: http://www.imf.org)

QUESTION 9

Household Consumption Expenditure Survey is released by:

(a) Department of Economic Affairs in the Union Finance Ministry

(b) NITI Aayog

(c) Centre for the Study of Developing Societies

(d) Ministry of Statistics and Programme Implementation

Explanation

— In an indication of the impact of rising food prices, the share of spending on food items in the consumption basket of rural and urban households went up in 2023-24, even as non-food items constituted the majority chunk of the spending.

— Fact sheet of the latest round of the Household Consumption Expenditure Survey 2023-24 released by the Ministry of Statistics and Programme Implementation (MoSPI) also showed rural spending growing at a faster pace than urban areas, narrowing the gap between the two, and also perhaps signalling a cut in consumption by urban households.

Therefore, option (d) is the correct answer.

QUESTION 10

With reference to QS World Future Skills Index 2025, consider the following statements:

1. India has been ranked second in terms of preparedness for jobs of the future including artificial intelligence (AI) and green skills, only behind the United States.

2. Overall, India ranked 25th across all indicators, making India one of the “future skills pioneers”.

Which of the statements given above is/are true?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Explanation

— India ranked 25th across all indicators, making the country a “future skills contender” according to the QS World Future Skills Index 2025. Hence, statement 2 is not correct.

— India has been ranked second in terms of preparedness for jobs of the future including artificial intelligence (AI) and green skills, only behind the United States, in the QS World Future Skills Index 2025. But in terms of economic transformation, India has been ranked 40th, and in terms of the workforce having the desired skills for future jobs, 37th, in the index. Hence, statement 1 is correct.

Therefore, option (a) is the correct answer.

QUESTION 11

With reference to the key takeaways from the Economic Survey for 2024-25 consider the following :

1. The world’s modus operandi of outsourcing manufacturing to China pursued vigorously in the globalisation era is poised for a reset.

2. India faces limitations in producing critical goods at the scale and quality required to serve the infrastructure and investment needs of an aspiring economy.

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

The Survey has flagged two main concerns.

Introducing the Economic Survey, CEA V Anantha Nageswaran said that the broader global economic environment has become unfavourable and challenging, and global trade and investment have “come to a crawl”.

“Global trade dynamics have changed significantly in recent years, shifting from globalisation to rising trade protectionism, accompanied by increased uncertainty,” the Survey says.

The impact of this shift in global structural forces is reflected in global trade growth, and “signs of secular stagnation in the global economy are beginning to emerge”.

The second big challenge concerns the dominance of China as the world’s manufacturing superpower – a third of all global production happens in China, and it alone manufactures more global output than the next 10 countries put together.

However, thanks to global economic fragmentation and upheaval, “the world’s modus operandi of outsourcing manufacturing to China pursued vigorously in the globalisation era is poised for a reset,” says the Survey. Hence, statement 1 is correct.

While the Survey sounds sanguine about India’s post-pandemic economic recovery, on the whole, it sounds an alert. “India faces limitations in producing critical goods at the scale and quality required to serve the infrastructure and investment needs of an aspiring economy,” says the preface of the Survey. Hence, statement 2 is correct.

Therefore, option (c) is the correct answer.

QUESTION 12

This theory is based on the observation that underdeveloped economies tend to grow more rapidly than wealthier economies, leading to a ‘catching-up’ effect. Which economic theory does this describe?

(a) Dependency Theory

(b) World Systems Theory

(c) Convergence Theory

(d) Modernization Theory

Explanation

— The catch-up effect, also known as the theory of convergence, is a concept suggesting that per capita incomes across all economies will eventually align. This theory stems from the observation that less developed economies typically experience faster growth than wealthier ones. As a result, these economies gradually catch up with more prosperous economies.

Therefore, option (c) is the correct answer.

QUESTION 13

With reference to ‘The India Employment Report 2024’, consider the following statements:

Statement 1: The report noted that the country’s job creation is struggling to keep up with the growing workforce.

Statement 2: It found that India’s labor force participation rate (LFPR) decreased in 2023-24.

(a) Statements 1 and 2 are true, and statement 2 is the correct explanation of statement 1.

(b) Statements 1 and 2 are true, but statement 2 is not the correct explanation of statement 1.

(c) Statement 1 is true, but statement 2 is false.

(d) Statement 1 is false, but statement 1 is true.

Explanation

— Even as overall labour force participation, workforce participation and employment rates improved in India in recent years after showing long-term deterioration during 2000-2019, the employment conditions remain poor, according to the ‘India Employment Report 2024’ released by the Institute for Human Development (IHD) and International Labour Organisation (ILO). Hence, statement 1 is correct and statement 2 is not correct.

Therefore, option (c) is the correct answer.

QUESTION 14

Consider the following statements regarding the Unified Portal for Agricultural Statistics (UPAg):

1. It is a platform designed exclusively for generating crop production estimates.

2. It integrates data from multiple sources, including trade, procurement, and stock statistics.

3. The portal provides near real-time agricultural information.

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1, 2, and 3

Explanation

According to upag.gov.in:

— “Unified Portal for Agricultural Statistics (UPAg) is an advanced agricultural data management platform designed to generate crop estimates and integrate with other systems generating Agriculture Statistics such as Price, Trade, Procurement, Stock etc. It serves as a centralized hub for near real time information on crop production, market trends, pricing, and other vital agricultural data.” Hence, statement 3 is correct.

— “UPAg is not exclusively for crop production estimates; it also integrates various agricultural statistics such as price, trade, procurement, and stock.” Hence, statement 1 is not correct and statement 2 is correct.

Therefore, option (b) is the correct answer.

(Source: upag.gov.in)

QUESTION 15

With reference to UDGAM portal, consider the following statements:

1. It facilitates the registered users to search unclaimed deposits/accounts across multiple banks at one place in a centralised manner and they can settle/ claim his/her unclaimed deposits through the portal or from RBI.

2. All unclaimed deposits/accounts that are part of Depositor Education and Awareness (DEA) Fund of RBI can be searched in UDGAM portal.

Which of the above given statements is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Explanation

According to http://www.rbi.org.in, FAQs on UDGAM portal,

— “UDGAM refers to Unclaimed Deposits-Gateway to Access inforMation, which is an online portal developed by RBI. It facilitates the registered users to search unclaimed deposits/accounts across multiple banks at one place in a centralised manner.” However the second part of the statement is not true. “No, the UDGAM portal facilitates only (a) the search of unclaimed deposits/accounts across multiple banks at one place and (b) provides information on claim/settlement process of each bank (which will be available in the search result). The unclaimed deposits can be claimed only from the respective bank.” Hence, statement 1 is not correct.

— “All unclaimed deposits/accounts that are part of Depositor Education and Awareness (DEA) Fund of RBI can be searched in UDGAM portal.” Hence, statement 2 is correct.

Therefore, option (b) is the correct answer.

(Source: rbi.gov.in)

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 98)

Daily subject-wise quiz — Polity and Governance (Week 98)

Daily subject-wise quiz —  Science and Technology (Week 96, 97 and 98)

Daily subject-wise quiz — Environment and Geography (Week 95)

Daily subject-wise quiz — Economy (Week 95)

Daily subject-wise quiz – International Relations (Week 95)

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