UPSC Prelims 2026 Economy questions: topic-wise weightage
UPSC Prelims 2026 asked 15 economy questions in GS Paper I, spread over 5 topics. See the economy weightage for 2026 below, then attempt each question with the official answer and an explanation.
Economy 2026: questions by topic
- Money, banking, monetary policy and inflation3
- Fiscal policy, budget and taxation1
- Financial markets and instruments6
- Agriculture, food security and allied sectors1
- Industry, infrastructure, poverty, employment and social sector4
Counted from the 15 questions on this page, tagged by topic in the Battle IAS PYQ bank.
Seeing 15 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 3
Which one of the following correctly represents the three key sub-indices of the Financial Inclusion Index (FI-Index) of the Reserve Bank of India (RBI) ?
Answer (c) & explanation
The sub-indices are Access, Usage and Quality (c). The RBI launched the FI-Index in August 2021. It covers banking, investments, insurance, postal services and pension, and gives one value between 0 and 100. Its three parameters are Access (35%), Usage (45%) and Quality (20%). Options (a), (b) and (d) list areas or ideas that are not its sub-indices; GDP contribution and affordability are not parameters.
Notice the logic: usage has the most weight, because an account that is never used does not mean real inclusion. Quality includes financial literacy and consumer protection. The index is published every July, and it has risen steadily, helped by Jan Dhan (2014) and UPI.
Answer as per the official UPSC answer key.
Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct ?
Answer (d) & explanation
Statement (d) is not correct (d). Under UPI, money moves between bank accounts; the deposit is a liability of the bank. The Digital Rupee (e₹) is like a currency note in digital form, a direct liability of the RBI, not of users or banks. Option (a) is correct: UPI is a payment system, while the e-rupee is sovereign currency. Option (b) is correct: an e-rupee transfer moves value from wallet to wallet with no separate settlement. Option (c) is correct: e-rupee wallet transactions do not appear in bank statements.
Notice the legal base: the RBI Act was amended in 2022 to let the RBI issue a CBDC. Pilots began that year in wholesale (e₹-W) and retail (e₹-R) forms.
a "not correct" question. Look for the statement that puts the RBI's liability on someone else.
Answer as per the official UPSC answer key.
Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India :
- 1. NBFCs cannot accept demand deposits.
- 2. All the NBFCs operating in India have to be registered with the RBI.
- 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself.
- 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs.
Which of the statements given above is/are correct ?
Answer (a) & explanation
Statements 1 and 4 are correct (a). The RBI lists how an NBFC differs from a bank. Statement 1 is right: NBFCs cannot accept demand deposits. Statement 4 is right: depositors of NBFCs get no DICGC insurance cover. Statement 3 is wrong: NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves. Statement 2 is wrong: not every NBFC registers with the RBI; insurers report to IRDAI, merchant bankers and brokers to SEBI, and chit funds to State governments. So options (b), (c) and (d) fail.
Notice the current rules: since 2021, the RBI regulates NBFCs through a Scale-Based Regulation in four layers: Base, Middle, Upper and Top. DICGC covers bank deposits up to ₹5 lakh.
"All the NBFCs" in statement 2. Many finance companies have another regulator.
Answer as per the official UPSC answer key.
Fiscal policy, budget and taxation 1
Which one of the following best describes the 'Crowding Out Effect' in the context of fiscal policy ?
Answer (b) & explanation
Crowding out means government borrowing raises interest rates and cuts private investment (b). When the government borrows heavily, it competes with companies for the same pool of savings. Interest rates rise, and some private projects no longer pay, so private investment is pushed out. Option (a) is wrong: it describes the opposite, "crowding in". Option (c) is wrong: higher taxes usually reduce, not raise, private spending. Option (d) is wrong: government spending does affect aggregate demand.
Notice the policy link: this is why high fiscal deficits worry the RBI and investors. India's FRBM Act (2003) set limits on deficits. The Centre aims to cut its fiscal deficit below 4.5% of GDP and then shift to a debt-to-GDP target.
Answer as per the official UPSC answer key.
Financial markets and instruments 6
Which of the following statements about Real-World Assets (RWA) Tokenization are correct ?
- 1. Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
- 2. Tokenization of real world assets offers 24x7 access, promoting financial inclusion.
- 3. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
Select the answer using the code given below :
Answer (a) & explanation
All three statements are correct (a). Statement 1 is right: tokenization turns a real asset, like a building, bond or gold, into digital tokens recorded on a blockchain. Statement 2 is right: tokens can be traded 24x7, which widens financial inclusion. Statement 3 is right: small, fractional tokens let ordinary individuals get into high-growth investments that once needed crores. So options (b), (c) and (d) fail.
Notice the risks: unclear regulation, cyber threats and weak investor protection. In India, related steps include Fractional Ownership Platforms and REITs and InvITs, which already let small investors own slices of real estate and infrastructure. The RBI is also testing tokenized deposits and government securities in sandbox pilots.
Answer as per the official UPSC answer key.
A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called :
Answer (c) & explanation
This is a sustainability bond (c). Under the ICMA principles followed worldwide, a bond that funds a mix of environmental and social projects is a sustainability bond. Option (a) is wrong: a green bond funds only environmental projects, like solar power. Option (b) is wrong: a social bond funds only social projects, like affordable housing. Option (d) is wrong: a sovereign bond is any bond issued by a national government, whatever its use.
Notice India's practice: India has issued Sovereign Green Bonds since January 2023, with the money going to projects like metro rail and renewable energy. A sustainability-linked bond is different: its money can go anywhere, but its interest rate depends on meeting ESG targets.
"Green Bond" is the most familiar term. The words "both environmental and social" point to the combined label.
Answer as per the official UPSC answer key.
Which of the following statements about M1xchange's role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct ?
- 1. M1xchange provides collateral based loans to MSMEs.
- 2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs.
- 3. M1xchange functions as a credit rating agency for MSMEs.
Select the answer using the code given below :
Answer (b) & explanation
Only statement 2 is correct (b). Statement 2 is right: M1xchange is an RBI-licensed TReDS platform (Trade Receivables Discounting System) where an MSME's invoices and bills of exchange are discounted. Statement 1 is wrong: it does not give collateral-based loans; financing is without collateral, backed by the big buyer's credit. Statement 3 is wrong: it is not a credit rating agency. So options (a), (c) and (d) fail.
Notice how TReDS works: an MSME uploads an invoice raised on a large buyer, and banks bid to discount it, so the MSME gets cash fast. The other platforms are RXIL and Invoicemart. Companies with turnover above ₹250 crore and CPSEs must join TReDS, easing delayed payments to MSMEs.
Answer as per the official UPSC answer key.
Which of the following statements about insurance in aviation sector is/are correct ?
- 1. 'Aviation Hull Insurance' covers the physical aircraft, including the body, engine, and on-board equipment.
- 2. Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault.
Select the answer using the code given below :
Answer (c) & explanation
Both statements are correct (c). Statement 1 is right: hull insurance covers the aircraft itself, its body, engines and on-board equipment. Statement 2 is right: under the Montreal Convention, 1999, which India joined in 2009, the airline is strictly liable for a passenger's death or injury up to a set limit, so the family need not prove fault for that first tier. So options (a), (b) and (d) fail.
Notice the tiers: above that limit, the airline can escape further payment only by proving it was not negligent. The convention replaced the older Warsaw Convention (1929). In India, it is applied through the Carriage by Air Act, 1972. Passenger and third-party claims fall under liability insurance, not hull cover.
Answer as per the official UPSC answer key.
Which of the following statements about Crowdfunding is/are correct ?
- 1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
- 2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
Select the answer using the code given below :
Answer (c) & explanation
Both statements are correct (c). Statement 1 is right: crowdfunding means raising small sums from many investors through an online platform or social media for a specific project. Statement 2 is right: it lets start-ups and SMEs raise money at a lower cost and with fewer procedures than a bank loan or public issue. Both lines come almost word for word from SEBI's 2014 consultation paper. So options (a), (b) and (d) fail.
Notice the types: donation-based (like Ketto for medical bills), reward-based, debt-based (peer-to-peer lending, regulated by the RBI since 2017), and equity-based. SEBI has not yet allowed equity crowdfunding in India, warning platforms against it.
Answer as per the official UPSC answer key.
With reference to different Committees in India, consider the following details :
| Sl. No. | Committee | Objective | Organization under which it was formed
| 1. | R.N. Malhotra Committee | Comprehensive reforms of Insurance sector in India | Insurance Regulatory and Development Authority of India
| 2. | L.C. Gupta Committee | Preparing a roadmap for the introduction of derivatives trading in India | Securities and Exchange Board of India
| 3. | Urjit R. Patel Committee | Preparing a roadmap for reforming bank lending to the Housing sector | Reserve Bank of India
| 4. | Y.H. Malegam Committee | Preparing a roadmap for reforms in Microfinance sector in India | Reserve Bank of India
In which of the above rows are all the details correctly matched ?
Answer (d) & explanation
Rows 2 and 4 are correct (d). Row 2 is right: the L.C. Gupta Committee (SEBI, 1996-98) prepared the roadmap for derivatives trading. Row 4 is right: the Y.H. Malegam Committee (RBI, 2010-11) reviewed microfinance after the Andhra Pradesh crisis. Row 1 is wrong: the R.N. Malhotra Committee (1993) was set up by the Government of India; IRDA itself was born from its report in 1999. Row 3 is wrong: the Urjit Patel Committee (RBI, 2014) designed the inflation-targeting framework, not housing loans. So options (a), (b) and (c) fail.
Notice the outcome of the Patel Committee: CPI-based inflation targeting of 4% ± 2% and a six-member Monetary Policy Committee (2016).
row 1 has the right subject but the wrong parent. A regulator cannot set up the committee that recommended its own birth.
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Answer as per the official UPSC answer key.
Agriculture, food security and allied sectors 1
Which among the following is/are the objective(s) of the Rainfed Area Development (RAD) initiative under the National Mission for Sustainable Agriculture (NMSA) ?
- 1. Encouraging monoculture in rainfed areas
- 2. Increasing rice cultivation in irrigated regions
- 3. Enhancing productivity and minimising climatic risks through Integrated Farming Systems (IFS)
Select the answer using the code given below :
Answer (d) & explanation
Only objective 3 belongs to RAD (d). Item 3 is right: Rainfed Area Development (RAD), an area-based part of the National Mission for Sustainable Agriculture (NMSA), promotes Integrated Farming Systems. It grows crops along with horticulture, livestock, fishery and agro-forestry, so a farmer in a dry area has more than one income source when the rain fails. Item 1 is wrong: monoculture raises risk. Item 2 is wrong: irrigated rice has nothing to do with a rainfed programme.
Notice why it matters: about half of India's net sown area is rainfed, growing much of its pulses, millets and oilseeds. NMSA is one of the eight missions under the National Action Plan on Climate Change (2008). Related: Per Drop More Crop for micro-irrigation.
statement 2 talks of "irrigated regions" in a scheme named "Rainfed". Read the scheme's own name before the statements.
Answer as per the official UPSC answer key.
Industry, infrastructure, poverty, employment and social sector 4
In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy ?
- 1. By functioning exclusively as a domestic cargo hub to reduce reliance on coastal shipping and eliminate the need for foreign collaborations.
- 2. By focusing primarily on passenger cruise tourism and heritage shipping to increase Kerala's profile as a maritime heritage destination.
- 3. By leveraging its natural deep draft and strategic location to reduce dependence on foreign trans-shipment ports, enhance revenue retention, and reposition India in regional maritime trade.
Select the answer using the code given below :
Answer (d) & explanation
Only statement 3 explains the shift (d). Statement 3 is right: Vizhinjam, in Kerala, is India's first deep-water container trans-shipment port, built on a PPP model and opened in 2025. It sits close to the main East-West shipping lane with a natural depth of about 18–20 m, so giant mother ships can call here instead of at Colombo, Singapore or Dubai. That keeps freight earnings at home. Statement 1 is wrong: it is an international cargo port. Statement 2 is wrong: it is not a cruise port.
Notice the problem it solves: earlier, about three-quarters of India's trans-shipped cargo was handled at foreign ports. The Adani group runs it. Galathea Bay in Great Nicobar is planned as another trans-shipment hub.
words like "exclusively" and "primarily" in statements 1 and 2. A trans-shipment port lives on foreign ships, so "eliminate foreign collaborations" cannot be right.
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Answer as per the official UPSC answer key.
An e-commerce revenue model where the seller has control over pricing but doesn't keep products in stock and instead transfers customer orders and shipment details to a third-party supplier, who then ships the goods directly to the customer, is called :
Answer (a) & explanation
This is the dropshipping model (a). In dropshipping, the online store sets the price and takes the order but keeps no stock. It passes the order to a third-party supplier, who ships straight to the buyer. Option (b) is wrong: in the affiliate model a site earns a commission only for sending buyers to another seller. Option (c) is wrong: a transaction-fee model charges a cut on each sale made on a platform. Option (d) is wrong: an agency seller acts on behalf of the owner, who controls the price.
Notice the trade-off: dropshipping needs little capital, but the seller earns thinner margins and depends on the supplier's quality and speed. India allows 100% FDI only in the marketplace model of e-commerce, not the inventory model.
the affiliate model also holds no stock. The clue is "the seller has control over pricing": an affiliate does not set the price.
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Answer as per the official UPSC answer key.
Which one of the following best describes the key objective of India's 'Open Network for Digital Commerce' (ONDC) initiative ?
Answer (c) & explanation
ONDC aims to break the dominance of large platforms (c). The Open Network for Digital Commerce, a DPIIT initiative (2021-22), is an open set of rules, like UPI for shopping. A buyer on one app can buy from a seller listed on another app. This interoperability lets small sellers reach buyers without joining a giant platform. Option (a) is wrong: it does not give the government control of transactions. Option (b) is wrong: private players can join; they are not replaced. Option (d) is wrong: it does not force UPI payments.
Notice ONDC's design: it is a not-for-profit company and part of India's Digital Public Infrastructure, along with Aadhaar, UPI and DigiLocker. It now covers food, groceries and mobility too.
options (a), (b) and (d) use strong words: "all", "replace", "mandate". A public digital platform usually opens a market; it does not take it over.
Answer as per the official UPSC answer key.
Consider the following statements about Multidimensional Poverty Index (MPI) :
- 1. MPI is calculated using Alkire-Foster methodology.
- 2. MPI calculated by NITI Aayog has a total of twelve indicators.
- 3. Maternal Health and Bank Account are common indicators in the MPI of NITI Aayog and MPI of United Nations Development Programme (UNDP).
Which of the statements given above is/are correct ?
Answer (a) & explanation
Statements 1 and 2 are correct (a). Statement 1 is right: both the global MPI (UNDP and Oxford's OPHI) and NITI Aayog's national MPI use the Alkire-Foster method, across health, education and standard of living. Statement 2 is right: NITI Aayog's MPI has 12 indicators. Statement 3 is wrong: the global MPI has 10 indicators; NITI Aayog added two of its own, maternal health and bank account, so these are not common. So options (b), (c) and (d) fail.
Notice the headline: NITI Aayog estimated that about 24.8 crore people escaped multidimensional poverty between 2013-14 and 2022-23. A person is MPI-poor if deprived in at least one-third of the weighted indicators.
statement 3 names the exact two indicators that make NITI's index different. They are extras, not shared ones.
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.