UPSC Prelims 2014 Economy questions: topic-wise weightage
UPSC Prelims 2014 asked 16 economy questions in GS Paper I, spread over 5 topics. See the economy weightage for 2014 below, then attempt each question with the official answer and an explanation.
Economy 2014: questions by topic
- Money, banking, monetary policy and inflation5
- Fiscal policy, budget and taxation2
- External sector and international economic institutions2
- Agriculture, food security and allied sectors6
- Industry, infrastructure, poverty, employment and social sector1
Counted from the 16 questions on this page, tagged by topic in the Battle IAS PYQ bank.
Seeing 16 Economy questions spread over 5 topics can feel overwhelming. That's exactly why the Battle IAS PYQ Book maps every question topic by topic, so you know what to study first. Download free sample
Money, banking, monetary policy and inflation 5
What does venture capital mean?
Answer (b) & explanation
Venture capital is long-term equity invested in new, risky businesses with high growth potential, usually start-ups (b). The investor takes a stake, often offers guidance, and exits later through a sale or an IPO. Option (a) is wrong because VC is long-term, not short-term working capital. Options (c) and (d) describe rescue finance and modernisation loans, not venture funding.
In India VC funds are registered with SEBI as Category I Alternative Investment Funds. Notice how VC links to the start-up ecosystem, angel investors and schemes like the Fund of Funds for Startups run through SIDBI.
Answer as per the official UPSC answer key.
The terms 'Marginal Standing Facility Rate' and 'Net Demand and Time Liabilities', sometimes appearing in news, are used in relation to
Answer (a) & explanation
Both terms belong to banking operations (a). The Marginal Standing Facility (2011) lets banks borrow overnight from the RBI in an emergency against government securities, at a rate above the repo rate; it forms the ceiling of the policy corridor. Net Demand and Time Liabilities are a bank's deposits and certain other liabilities; the CRR and SLR are calculated as a share of NDTL. The other options are unrelated fields.
The floor of the corridor is now the Standing Deposit Facility (2022). Notice how these tools let the RBI keep the overnight call rate close to the repo rate.
Answer as per the official UPSC answer key.
What is/are the facility/facilities the beneficiaries can get from the services of Business Correspondent (Bank Saathi) in branchless areas?
- 1. It enables the beneficiaries to draw their subsidies and social security benefits in their villages.
- 2. It enables the beneficiaries in the rural areas to make deposits and withdrawals.
Select the correct answer using the code given below.
Answer (c) & explanation
Both are correct (c). Business Correspondents, allowed by the RBI since 2006, act as bank agents in villages without branches. With a handheld or biometric device they let people deposit and withdraw small sums and open accounts (2 correct). They also deliver subsidies, pensions and MGNREGA wages through Direct Benefit Transfer at the doorstep (1 correct).
BCs were the backbone of financial inclusion drives such as PM Jan Dhan Yojana (2014), together with Aadhaar-enabled payments. Notice how technology, banking and welfare delivery come together in the JAM trinity: Jan Dhan, Aadhaar and Mobile.
Answer as per the official UPSC answer key.
In the context of Indian economy, which of the following is/are the purpose/purposes of 'Statutory Reserve Requirements'?
- 1. To enable the Central Bank to control the amount of advances the banks can create
- 2. To make the people's deposits with banks safe and liquid
- 3. To prevent the commercial banks from making excessive profits
- 4. To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
Answer (a) & explanation
Statutory reserve requirements are the CRR and SLR. By raising or lowering them, the RBI changes how much money banks can lend, so their key purpose is to control credit creation (1 correct). Deposit safety and liquidity (2) are only a side effect, not the stated purpose in UPSC's key. Curbing bank profits (3) is no aim at all, and keeping vault cash for daily needs (4) is the bank's own business.
The CRR is held as cash with the RBI; the SLR is kept in liquid assets such as government securities. Notice how these are quantitative tools, unlike qualitative tools such as moral suasion.
statement 2 sounds right because SLR assets are safe and liquid. The question asks for the purpose, which is credit control.
Answer as per the official UPSC answer key.
If the interest rate is decreased in an economy, it will
Answer (c) & explanation
A lower interest rate makes borrowing cheaper, so firms invest more in plant and machinery (c). Option (a) is wrong because cheaper credit usually raises, not lowers, consumption on homes, cars and consumer goods. Option (d) is wrong because saving earns less and becomes less attractive, so savings tend to fall. Any rise in tax collection (b) would be indirect and uncertain, not a direct effect.
This is why the RBI's Monetary Policy Committee cuts the repo rate to support growth and raises it to fight inflation. Notice how one policy rate ripples through loans, deposits, investment and prices.
Answer as per the official UPSC answer key.
Fiscal policy, budget and taxation 2
The sales tax you pay while purchasing a toothpaste is a
Answer (d) & explanation
In 2014, sales tax (by then State VAT) on goods sold within a State was levied and collected by the State under Entry 54 of the State List (d). The Centre levied Central Sales Tax only on inter-State sales, and that too was collected by the States, so (a), (b) and (c) do not fit an ordinary toothpaste purchase.
Since July 2017 a toothpaste carries GST: CGST and SGST shared by the Centre and the State, under the 101st Amendment. Sales tax now survives only on items outside GST, such as petrol, diesel and alcohol for drinking. Notice how a question can change its answer with a reform, so read it in its year.
read the question in its 2014 setting. Today the answer would be GST, not sales tax.
Answer as per the official UPSC answer key.
With reference to Union Budget, which of the following is/are covered under Non-Plan Expenditure?
- 1. Defence expenditure
- 2. Interest payments
- 3. Salaries and pensions
- 4. Subsidies
Select the correct answer using the code given below.
Answer (c) & explanation
All four were Non-Plan expenditure (c). Until 2016-17 the Budget split spending into Plan (new schemes and projects under the Five-Year Plan) and Non-Plan (running costs). Defence, interest payments, salaries and pensions, and subsidies all fell under Non-Plan. Options leaving out any of them are incomplete.
From 2017-18 the Plan/Non-Plan split was dropped, following the end of Five-Year Plans, and the Budget now uses revenue and capital expenditure. The same year the Railway Budget was merged into the Union Budget. Notice how fiscal terms change with reforms, so read such questions in their year.
this split no longer exists. Learn it for history and know today's revenue/capital split.
Answer as per the official UPSC answer key.
External sector and international economic institutions 2
With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?
- 1. Balance of trade
- 2. Foreign assets
- 3. Balance of invisibles
- 4. Special Drawing Rights
Select the correct answer using the code given below.
Answer (c) & explanation
The current account = balance of trade in goods + the balance of invisibles (services, income such as interest and dividends, and transfers such as remittances). So 1 and 3 are correct (c). Foreign assets belong to the capital and financial account, and Special Drawing Rights are part of official foreign exchange reserves, so options with 2 or 4 fail.
India usually runs a trade deficit in goods that is partly offset by a surplus in software services and remittances, India being the world's largest recipient. Notice how the current account deficit links trade, the rupee's value and the stability of the whole economy.
Answer as per the official UPSC answer key.
Which of the following organizations brings out the publication known as 'World Economic Outlook'?
Answer (a) & explanation
The IMF publishes the World Economic Outlook twice a year, in April and October, with updates in between (a). The World Bank (d) publishes Global Economic Prospects and earlier the Ease of Doing Business report. The UNDP (b) publishes the Human Development Report. The World Economic Forum (c) publishes the Global Competitiveness and Global Gender Gap reports.
The IMF also publishes the Global Financial Stability Report and the Fiscal Monitor. Notice how matching reports to their publishers is one of UPSC's most repeated themes; a short table saves easy marks.
Answer as per the official UPSC answer key.
Agriculture, food security and allied sectors 6
What are the significances of a practical approach to sugarcane production known as 'Sustainable Sugarcane Initiative'?
- 1. Seed cost is very low in this compared to the conventional method of cultivation.
- 2. Drip irrigation can be practised very effectively in this.
- 3. There is no application of chemical/inorganic fertilizers at all in this.
- 4. The scope for intercropping is more in this compared to the conventional method of cultivation.
Select the correct answer using the code given below.
Answer (b) & explanation
SSI raises single-bud seedlings in a nursery and transplants them with wide spacing. Far less seed cane is needed, so seed cost falls (1 correct). Wide rows suit drip irrigation (2 correct) and leave space for intercropping pulses or vegetables (4 correct). Statement 3 is the odd one out: SSI cuts chemical use through efficient, balanced inputs, but it does not ban fertilizers.
SSI grew out of the System of Rice Intensification (SRI) idea of "less input, more output". Notice how the same logic of spacing, water saving and soil health keeps returning in questions on SRI, micro-irrigation and natural farming.
"no application ... at all". SSI is about efficient inputs, not organic farming.
Answer as per the official UPSC answer key.
Consider the following pairs :
| Programme/Project | Ministry
| 1. Drought-Prone Area Programme | Ministry of Agriculture
| 2. Desert Development Programme | Ministry of Environment and Forests
| 3. National Watershed Development Project for Rainfed Areas | Ministry of Rural Development
Which of the above pairs is/are correctly matched?
Answer (d) & explanation
Every pair is swapped, so the answer is none (d). The Drought-Prone Area Programme (1973) and the Desert Development Programme (1977) were area programmes of the Ministry of Rural Development (Department of Land Resources), not Agriculture or Environment. The National Watershed Development Project for Rainfed Areas (1990) was run by the Ministry of Agriculture, not Rural Development.
All three were merged into the Integrated Watershed Management Programme in 2009, which is now the watershed component of PMKSY. Notice how drought, desert and rainfed farming all lead back to one idea: managing water at the level of the watershed.
the names sound like Agriculture or Environment. UPSC tests which ministry actually ran them.
Answer as per the official UPSC answer key.
In India, cluster bean (Guar) is traditionally used as a vegetable or animal feed, but recently the cultivation of this has assumed significance. Which one of the following statements is correct in this context?
Answer (b) & explanation
Guar gum, made from the seed of the cluster bean, thickens the water used in hydraulic fracturing to extract shale gas and oil (b). The shale boom in the USA turned guar into a big export crop for Rajasthan, which grows most of the world's guar, and prices shot up around 2012. Option (a) is wrong: guar oil is not used for biodegradable plastics. Options (c) and (d), anti-histamine leaves and biodiesel, are not its claim to fame.
Guar gum is also used as a thickener in food, cosmetics and paper. Notice how a hardy dryland crop became tied to global energy markets.
Answer as per the official UPSC answer key.
What are the benefits of implementing the 'Integrated Watershed Development Programme'?
- 1. Prevention of soil runoff
- 2. Linking the country's perennial rivers with seasonal rivers
- 3. Rainwater harvesting and recharge of groundwater table
- 4. Regeneration of natural vegetation
Select the correct answer using the code given below.
Answer (c) & explanation
A watershed programme treats a whole catchment. Check dams, trenches, bunds and planting stop soil runoff (1 correct), harvest rainwater and recharge groundwater (3 correct), and help regenerate natural vegetation (4 correct). Statement 2 is wrong: linking perennial and seasonal rivers is the separate national Interlinking of Rivers project, not a local watershed activity. So the answer is (c).
The IWMP of 2009 now runs as the Watershed Development Component of PMKSY. Notice how the "ridge to valley" approach treats land and water together: it echoes Ralegan Siddhi and other village success stories.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. Maize can be used for the production of starch.
- 2. Oil extracted from maize can be a feedstock for biodiesel.
- 3. Alcoholic beverages can be produced by using maize.
Which of the statements given above is/are correct?
Answer (d) & explanation
All three are correct (d). Maize grain gives starch and sweeteners (1). Corn oil can be a feedstock for biodiesel (2). Fermented maize gives alcohol, from bourbon whisky to fuel ethanol (3). Options leaving out any of these are incomplete.
Today maize is a key feedstock for India's ethanol blending programme, which reached about 20% blending (E20) in 2025. That has raised maize demand and prices, and even led India to import maize. Maize is also used for poultry feed. Notice how one crop links farming to energy security and the food-versus-fuel debate.
Answer as per the official UPSC answer key.
In the context of food and nutritional security of India, enhancing the 'Seed Replacement Rates' of various crops helps in achieving the food production targets of the future. But what is/are the constraint/constraints in its wider/greater implementation?
- 1. There is no National Seeds Policy in place.
- 2. There is no participation of private sector seed companies in the supply of quality seeds of vegetables and planting materials of horticultural crops.
- 3. There is a demand-supply gap regarding quality seeds in case of low value and high volume crops.
Select the correct answer using the code given below.
Answer (b) & explanation
The seed replacement rate is the share of area sown with fresh certified seed instead of farm-saved seed. Statement 1 is wrong because India has had a National Seeds Policy since 2002. Statement 2 is wrong because private firms dominate vegetable and horticulture seed. The real gap lies in low-value, high-volume crops such as wheat, paddy and pulses, where private firms see little profit (3 correct). So the answer is (b).
Public bodies like the National Seeds Corporation and State seed corporations fill this gap. Notice how better seed is the cheapest input for higher yields.
Answer as per the official UPSC answer key.
Industry, infrastructure, poverty, employment and social sector 1
The main objective of the 12th Five-Year Plan is
Answer (d) & explanation
The 12th Five-Year Plan (2012–17) had the theme "Faster, More Inclusive and Sustainable Growth" (d). Options (b) and (c) use some of the same words but miss "faster", and (a) is closer in spirit to earlier plans. The 11th Plan (2007–12) was "Towards Faster and More Inclusive Growth", so the 12th simply added sustainability.
The 12th was India's last Five-Year Plan. NITI Aayog replaced the Planning Commission in January 2015 and moved to vision and strategy documents instead. Notice how plan themes trace India's changing priorities: from heavy industry in the 2nd Plan to inclusion and sustainability later.
options (b) and (c) use the same words. Only (d) has all three: faster, sustainable, inclusive.
Answer as per the official UPSC answer key.
All years by topic
Every question from 2011 to 2026, grouped by syllabus topic, with year-wise trends.