UPSC Essentials | Daily subject-wise quiz : Economy MCQs on India’s imports of gold and silver, coal gasification and more (Week 162)

3. The prohibition on sugar exports will apply to the advance authorisation scheme (AAS) and government-to-government exports.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

Relevance: This topic is important for UPSC Prelims because export restrictions on essential commodities are closely linked to food security, inflation management, and trade policy. Questions may also arise from schemes related to exports, agricultural commodities, and government measures to stabilise prices and ensure domestic availability.

Explanation

— The Directorate General of Foreign Trade (DGFT) prohibited export of raw, white and refined sugar with immediate effect till September 30 amid inflation and future supply-related concerns in the backdrop of the ongoing West Asia conflict. The prohibition will not apply to sugar exports to the European Union and the US under the preferential quota, the notification said. Hence, statement 1 is correct and statement 2 is not correct.

— The prohibition on sugar exports will also not apply to the advance authorisation scheme (AAS), government-to-government exports, and consignments already in the physical export pipeline, it stated. Hence, statement 3 is not correct.

— The decision to ban sugar exports is seen more as a precautionary move, given the finely balanced supply and stocks position. Sugar production in the 2025-26 season (October-September) has been estimated at about 275 lakh tonnes.

Therefore, option (a) is the correct answer.

QUESTION 2

With reference to India’s imports of gold and silver, consider the following statements:

1. India is the largest importer of gold in the world.

2. India’s Silver imports in 2025-26 decreased to half when compared to 2024-25.

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: This topic is important for UPSC Prelims because imports of gold and silver directly influence India’s trade deficit, current account balance, and foreign exchange outflows. Questions may be framed from the Economy syllabus linking precious metal imports with inflation, monetary trends, and consumer demand patterns.

Explanation

— The government authorised 17 banks to import bullion for three years starting April 1, putting an end to the uncertainty caused by the delay in issuing this list, which is usually released in the first few days of the new financial year.

— India is the second-largest importer of gold and brought in $72 billion worth of it in 2025-26, 24% higher than in 2024-25. Silver imports in the last fiscal amounted to $12 billion, more than double the $4.8 billion imported the previous year. Hence, statements 1 and 2 are not correct.

— Gold constitutes the second-biggest item in India’s import bill after crude oil imports. In FY26, the country’s gold imports jumped by 24.1% to $71.97 billion compared to $58 billion in the previous financial year.

— The current geopolitical situation has created significant volatility in global crude oil markets and international shipping routes, officials said, adding that as a large importer of crude oil, India remains vulnerable to elevated energy prices and supply-side disruptions, which can increase the import bill, exert pressure on inflation, and the CAD.

Therefore, option (d) is the correct answer.

QUESTION 3

TARGET Instant Payment Settlement (TIPS) is a:

(a) Global cryptocurrency settlement mechanism developed by the IMF.

(b) Cross-border trade financing platform operated by the World Bank.

(c) Digital taxation network established by the European Union for e-commerce transactions.

(d) An instant payment system operated by the Eurosystem.

Relevance: This question is important for UPSC Prelims because digital payment infrastructure and global financial systems are increasingly relevant in the context of central banking, fintech, and international economic institutions.

Explanation

— The Reserve Bank of India (RBI) and the European Central Bank (ECB) signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking. The MoU, which updates the previous MoU of 2015, provides a framework for a regular exchange of information, policy dialogue and technical cooperation between the two institutions in areas of mutual interest in the field of central banking.

— ECB is the central bank of the euro area, which comprises European Union (EU) countries that have the euro as their currency. Its main task is to maintain price stability in the region.

— Earlier in 2025, the RBI and NPCI International Payments Limited (NIPL) along with the European Central Bank, agreed to start the realisation phase for the UPI-TIPS link.

— TARGET Instant Payment Settlement (TIPS) is the instant payment system operated by the Eurosystem.

— In 2023, RBI and Bank of England signed a memorandum of understanding (MoU) on cooperation and exchange of information related to Clearing Corporation of India Ltd (CCIL). CCIL is a central counterparty which provides clearing and settlement for transactions in government securities, forex and money markets. It is regulated by the central bank.

Therefore, option (d) is the correct answer.

QUESTION 4

With reference to coal gasification, consider the following statements:

1. It is a process of converting coal into synthesis gas (syngas).

2. It involves the oxidation of coal at higher temperatures and pressures.

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: This topic is important for UPSC Prelims because coal gasification is linked to India’s energy security, clean coal technologies, and the transition toward lower-emission industrial processes. It is also relevant given government initiatives that encourage coal gasification projects and the sustainable utilisation of domestic coal reserves.

Explanation

— The Union cabinet approved a new scheme to promote conversion of coal and lignite into synthesis gas (syngas) through the gasification process in a move to strengthen energy security.

— According to the government, the new scheme aims at enhancing energy security and reducing dependence on imports of key products such as LNG, urea, ammonia, and methanol.

— India has limited reserves of crude oil and natural gas and is dependent on imports, making it vulnerable to global price volatility and supply disruptions. At the same time, it has the fourth-largest coal reserves globally, with an estimated 389 billion tonnes (bt). Of this, 212 bt are classified as proven reserves, which means they are economically extractable with reasonable certainty based on a detailed Preliminary Feasibility Study.

— Coal gasification is a thermochemical process of converting coal into synthesis gas (syngas), which is a mixture of fuel-rich gases like carbon monoxide (CO), carbon dioxide (CO2), hydrogen (H2), and methane (CH4). Hence, statement 1 is correct.

— The syngas can be used for producing Synthetic Natural Gas (SNG), electricity generation, energy fuel (methanol and ethanol), ammonia for fertilisers, and chemicals. The coal gasification process involves oxidation of coal at higher temperatures and pressures to produce syngas. There are two main types of gasification: Surface gasification and Underground coal gasification (UCG). Hence, statement 2 is correct.

— In surface coal gasification, coal is first mined and then converted into gas in above-ground industrial reactors using oxygen, steam and high temperatures. In contrast, underground coal gasification converts coal into gas while it is still buried deep underground by injecting air or oxygen into coal seams through wells and extracting the resulting gas to the surface.

Therefore, option (c) is the correct answer.

QUESTION 5

The ‘Deviation Settlement Mechanism’ (DSM) penalties are associated with:

(a) Violations in environmental emission standards by industries.

(b) Delays in Goods and Services Tax (GST) compensation payments to states.

(c) Non-compliance in banking sector capital adequacy requirements.

(d) Deviations in electricity generation or consumption from scheduled grid operations.

Relevance: This topic is important for UPSC Prelims because power sector reforms, electricity market regulations, and grid management mechanisms are recurring areas in the Economy and Infrastructure syllabus. It also connects with institutions regulating the power sector and current developments in energy governance.

Explanation

— The 2026-27 Union Budget allocated Rs 2 lakh crore as 50-year, interest-free capex loans for states called Special Assistance to States for Capital Investment (SASCI). Under this programme, while Rs 75,000 crore is ‘untied’ – or provided without any conditions – the majority is tied to the reform performance of each state across a variety of spheres ranging from power, mining, agriculture, and public finance, among others. As such, the better a state performs on these reform criteria, the more they can avail from the ‘tied’ component of the programme.

— India has 172 gigawatts of solar modules and 27.2 GW of cell manufacturing capacity. However, the installed ingot and wafer manufacturing capacity in the country is limited and stands around 2 GW. At present, there is no commercial production of polysilicon in the country, the government had previously informed the Parliament.

— Deviation Settlement Mechanism (DSM) penalties — a key concern for renewable energy developers. DSM in India imposes financial charges on power generators and discoms for deviating from scheduled electricity generation or drawal to maintain grid stability.

Therefore, option (d) is the correct answer.

🚨 Click Here to read the UPSC Essentials magazine for April 2026. Share your views and suggestions in the comment box or at manas.srivastava@indianexpress.com🚨

Previous Daily Subject-Wise-Quiz

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 155)

Daily subject-wise quiz — Polity and Governance (Week 162)

Daily subject-wise quiz —  Science and Technology (Week 162)

Daily subject-wise quiz — Economy (Week 161)

Daily subject-wise quiz — Environment and Geography (Week 161)

Daily subject-wise quiz – International Relations (Week 161)

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