Economy: previous-year questions
347 real UPSC Prelims questions (2011–2026) with the official answer and a clear explanation. 96 of them came in the last five papers.
How often UPSC asks this
Questions per year, counted from the official papers.
Subtopics
Agriculture, food security and allied sectors
81 questions
Economic development, reports and indices
28 questions
Economic growth, planning and national income
7 questions
External sector and international economic institutions
70 questions
Financial markets and instruments
36 questions
Fiscal policy, budget and taxation
51 questions
Industry, infrastructure, poverty, employment and social sector
125 questions
Money, banking, monetary policy and inflation
85 questions
Attempt the questions
Newest papers first. Tap an option; the answer and the reason appear instantly.
Consider the following :
- 1. Areca nut
- 2. Barley
- 3. Coffee
- 4. Finger millet
- 5. Groundnut
- 6. Sesamum
- 7. Turmeric
The Cabinet Committee on Economic Affairs has announced the Minimum Support Price for which of the above ?
Answer (b) & explanation
Barley, finger millet, groundnut and sesamum get an MSP (b). The CCEA announces Minimum Support Prices for 22 crops on the advice of the CACP, plus a Fair and Remunerative Price for sugarcane. These include 14 kharif crops, such as paddy, jowar, bajra, ragi (finger millet), groundnut, sesamum and cotton; 6 rabi crops, such as wheat, barley, gram and mustard; and copra and jute. Areca nut, coffee and turmeric are plantation or spice crops with no MSP, so options containing 1, 3 or 7 are wrong.
Since 2018–19, MSP is set at least 1.5 times the cost of production (A2+FL). Notice the farmer unions' demand for a legal guarantee of MSP, which is still under debate.
Answer as per the official UPSC answer key.
With reference to digital payments, consider the following statements :
- 1. BHIM app allows the user to transfer money to anyone with a UPI-enabled bank account.
- 2. While a chip-pin debit card has four factors of authentication, BHIM app has only two factors of authentication.
Which of the statements given above is/are correct ?
Answer (a) & explanation
Only statement 1 is correct (a). BHIM (Bharat Interface for Money), launched by NPCI in December 2016, is a UPI app that can pay anyone whose bank account is on UPI (1), using a UPI ID, mobile number or QR code. Statement 2 is wrong. A chip-and-PIN debit card uses two factors: something you have (the card) and something you know (the PIN). BHIM is not weaker. It binds your registered phone and device, adds the UPI PIN, and links to your bank account, giving it at least as much security.
BHIM 3.0 (2025) added shared family payments and spending analytics. Notice the RBI's rules for two-factor authentication on digital payments, including new options beyond SMS OTP from April 2026.
Answer as per the official UPSC answer key.
With reference to the governance of public sector banking in India, consider the following statements :
- 1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
- 2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct ?
Answer (b) & explanation
Only statement 2 is correct (b). Statement 1 is wrong because capital infusion into public sector banks did not rise steadily. It went up and down from year to year, and jumped sharply only around 2017–19, through recapitalisation bonds under the Indradhanush plan and the ₹2.11 lakh crore package. Statement 2 is right because, on 1 April 2017, the five associate banks (State Bank of Bikaner and Jaipur, Hyderabad, Mysore, Patiala and Travancore) and Bharatiya Mahila Bank merged with the State Bank of India.
Further mergers followed: Bank of Baroda with Vijaya and Dena (2019), and ten banks into four in 2020, leaving 12 public sector banks. Notice their turnaround: PSBs made record profits of over ₹1.7 lakh crore in FY2024–25.
Answer as per the official UPSC answer key.
International Labour Organization's Conventions 138 and 182 are related to
Answer (a) & explanation
ILO Conventions 138 and 182 deal with child labour (a). Convention 138 (1973) sets the minimum age for work, which is usually not below the age of finishing compulsory schooling. Convention 182 (1999) bans the worst forms of child labour, such as slavery, trafficking, child soldiers and hazardous work. India ratified both in June 2017, after amending its Child Labour Act in 2016 to ban all work below 14 and hazardous work for those aged 14–18. They do not deal with climate adaptation (b), food prices (c), or gender parity (d), which is covered by Conventions 100 and 111.
Convention 182 became the first ILO convention ratified by every member (2020). Notice the eight core conventions; India has ratified six of them, but not 87 and 98 on freedom of association.
Answer as per the official UPSC answer key.
Consider the following items :
- 1. Cereal grains hulled
- 2. Chicken eggs cooked
- 3. Fish processed and canned
- 4. Newspapers containing advertising material
Which of the above items is/are exempted under GST (Goods and Services Tax) ?
Answer (c) & explanation
Items 1, 2 and 4 are exempt (c). Under GST, basic, unprocessed and unbranded food is exempt to keep everyday essentials cheap. This covers hulled cereal grains (1) and eggs (2), including the cooked eggs listed in the exemption. Printed newspapers (4) are exempt even if they carry advertisements, although the ad services themselves are taxed. Processed and canned fish (3) is a value-added, packaged product, so it is taxed, which is why (d) is wrong.
GST came into force on 1 July 2017 after the 101st Amendment. Notice GST 2.0 (September 2025), which simplified rates into mainly two slabs of 5% and 18%, plus a 40% rate for luxury and sin goods.
eggs "cooked" sound processed. The GST exemption entry covers birds' eggs "in shell, fresh, preserved or cooked".
Answer as per the official UPSC answer key.
With reference to the 'Global Alliance for Climate-Smart Agriculture (GACSA)', which of the following statements is/are correct ?
- 1. GACSA is an outcome of the Climate Summit held in Paris in 2015.
- 2. Membership of GACSA does not create any binding obligations.
- 3. India was instrumental in the creation of GACSA.
Select the correct answer using the code given below :
Answer (b) & explanation
Only statement 2 is correct (b). Statement 1 is wrong because the Global Alliance for Climate-Smart Agriculture was launched at the UN Climate Summit in New York, September 2014, not at Paris 2015. The FAO hosts its facilitation unit. Statement 2 is right because it is a voluntary alliance of governments, farmer groups, NGOs and companies, and membership creates no binding obligations. Statement 3 is wrong because India is not a member and played no part in creating it.
Climate-smart agriculture has three goals: raising productivity, building resilience (adaptation), and cutting emissions where possible. Notice India's own effort, the National Innovations in Climate Resilient Agriculture (NICRA), run by ICAR since 2011.
"Paris" is the most famous climate meeting. GACSA came a year earlier, in New York.
Traps like this come back in new clothes. The PYQ Book collects all of them, topic by topic, so none catch you twice. Try the free sample
Answer as per the official UPSC answer key.
With reference to organic farming in India, consider the following statements :
- 1. 'The National Programme for Organic Production' (NPOP) is operated under the guidelines and directions of the Union Ministry of Rural Development.
- 2. 'The Agricultural and Processed Food Products Export Development Authority' (APEDA) functions as the Secretariat for the implementation of NPOP.
- 3. Sikkim has become India's first fully organic State.
Which of the statements given above is/are correct ?
Answer (b) & explanation
Statements 2 and 3 are correct (b). Statement 1 is wrong because the National Programme for Organic Production (NPOP), started in 2001, runs under the Ministry of Commerce and Industry, not Rural Development. It sets India's organic standards and accredits certification bodies, mainly for exports. Statement 2 is right because APEDA is its secretariat. Statement 3 is right because Sikkim was declared India's first fully organic state in January 2016, after phasing out chemical fertilisers and pesticides.
Sikkim won the FAO's Future Policy Award in 2018. Notice the domestic schemes: Paramparagat Krishi Vikas Yojana (PKVY), MOVCDNER for the North-East, and the National Mission on Natural Farming (2024).
organic farming sounds like a rural or agriculture subject. NPOP is an export programme, so it sits with Commerce.
UPSC repeats traps like this year after year. The PYQ Book gathers every trap in one place, so you see them coming. Try the free sample
Answer as per the official UPSC answer key.
Which one of the following best describes the term "Merchant Discount Rate" sometimes seen in news ?
Answer (c) & explanation
MDR is the charge a merchant pays the bank for accepting card payments (c). The Merchant Discount Rate is the fee a shopkeeper pays for each card or digital payment received. It is shared among the issuing bank (the customer's bank), the acquiring bank (which provides the PoS machine) and the card network, such as Visa or RuPay. It is not an incentive paid to the merchant (a, d), and it is not cashback to the customer (b).
Since January 2020, there is no MDR on RuPay debit cards and BHIM-UPI payments, to encourage digital payments, and the government compensates banks through an incentive scheme. Notice the debate: fintech firms and banks say zero MDR makes UPI hard to sustain, and MDR on large merchants keeps coming up in discussion.
options (a) and (d) call it an "incentive". MDR is a charge on the merchant, not a reward.
Answer as per the official UPSC answer key.
Which one of the following statements correctly describes the meaning of legal tender money ?
Answer (b) & explanation
Legal tender is money a creditor must accept in settling a debt (b). Legal tender is money that the law requires to be accepted as payment. In India, RBI notes are unlimited legal tender, under the RBI Act. Coins issued by the government are legal tender up to set limits under the Coinage Act, 2011: ₹1,000 for coins of ₹1 and above. Court fees (a) have nothing to do with it. Cheques and drafts (c) are not legal tender, so a creditor may refuse them. Metallic money (d) is too narrow a description.
When the ₹500 and ₹1,000 notes were demonetised in November 2016, they lost their legal tender status. Notice that the RBI's e-rupee (CBDC) is also legal tender, while cryptocurrencies are not.
Answer as per the official UPSC answer key.
With reference to India's decision to levy an equalization tax of 6% on online advertisement services offered by non-resident entities, which of the following statements is/are correct ?
- 1. It is introduced as a part of the Income Tax Act.
- 2. Non-resident entities that offer advertisement services in India can claim a tax credit in their home country under the "Double Taxation Avoidance Agreements".
Select the correct answer using the code given below :
Answer (d) & explanation
Neither statement is correct (d). Statement 1 is wrong because the 6% equalisation levy (2016) was introduced through a separate chapter of the Finance Act, 2016, not the Income Tax Act. The Indian business paying a foreign firm like Google or Facebook for online ads deducted it. Statement 2 is wrong because the levy is not an income tax, so the foreign firm cannot claim credit for it under a DTAA in its home country. This is exactly why it was designed outside the Income Tax Act.
A 2% levy on e-commerce was added in 2020 and dropped in 2024. The 6% levy on ads ended in April 2025. Notice the reason: India is moving towards the OECD Two-Pillar global tax deal and is also under US trade pressure.
statement 2 sounds fair. Tax treaties cover taxes on income; the levy was kept outside the Income Tax Act for exactly this reason.
Answer as per the official UPSC answer key.
If a commodity is provided free to the public by the Government, then
Answer (c) & explanation
The opportunity cost moves from the users to the taxpaying public (c). Nothing is truly free. The resources used to make a "free" good could have produced something else, and that lost alternative is its opportunity cost. When the government gives something away free, the users do not pay, but taxpayers do, because the government's money comes from taxes. The cost is not zero (a), and it is not ignored (b). Option (d) is wrong because the government is only the channel, spending the public's money.
This is the logic behind the "freebies" debate. The Supreme Court and the Election Commission have looked at the line between welfare and freebies. Notice the related idea of merit goods, such as education and health, where free supply is justified.
option (d) says the government bears the cost. The government spends; taxpayers finally pay.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. The Standard Mark of Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.
- 2. AGMARK is a quality Certification Mark issued by the Food and Agriculture Organisation (FAO).
Which of the statements given above is/are correct ?
Answer (a) & explanation
Only statement 1 is correct (a). The BIS Standard Mark (ISI) is mandatory for certain products through Quality Control Orders, including automotive tyres and tubes, cement, LPG cylinders, electrical appliances and packaged water (1). Statement 2 is wrong because AGMARK is not issued by the FAO. It is India's own mark for farm products such as ghee, honey, spices and pulses. It is given by the Directorate of Marketing and Inspection under the Agricultural Produce (Grading and Marking) Act, 1937.
BIS got statutory status under the BIS Act, 1986, replaced by the 2016 Act. Notice the other quality marks: Hallmark (gold, mandatory since 2021), FPO (processed fruit), Ecomark and FSSAI licensing.
Answer as per the official UPSC answer key.
Which of the following practices can help in water conservation in agriculture ?
- 1. Reduced or zero tillage of the land
- 2. Applying gypsum before irrigating the field
- 3. Allowing crop residue to remain in the field
Select the correct answer using the code given below :
Answer (c) & explanation
Practices 1 and 3 save water (c). Reduced or zero tillage (1) leaves the soil structure intact, so less moisture is lost and more rain soaks in. Leaving crop residue on the field (3) works as a mulch that shades the soil, cuts evaporation and adds organic matter. The Happy Seeder machine sows wheat straight into rice stubble, which also cuts down stubble burning. Statement 2 is wrong because gypsum (calcium sulphate) is used to reclaim sodic (alkaline) soils and supply calcium and sulphur. It is not a water-saving practice.
Both 1 and 3 are parts of conservation agriculture, along with crop rotation. Notice the related water-saving methods: direct-seeded rice (DSR), alternate wetting and drying, and laser land levelling.
Answer as per the official UPSC answer key.
What is/are the advantage/advantages of implementing the 'National Agriculture Market' scheme ?
- 1. It is a pan-India electronic trading portal for agricultural commodities.
- 2. It provides the farmers access to nationwide market, with prices commensurate with the quality of their produce.
Select the correct answer using the code given below :
Answer (c) & explanation
Both statements are correct (c). e-NAM, launched in April 2016, is a pan-India online trading portal (1) that connects existing APMC mandis. Produce is assayed for quality, and farmers can get bids from traders across the country. This brings prices that match quality and wider demand (2), with online payment. The Small Farmers' Agribusiness Consortium (SFAC) runs it for the Agriculture Ministry. About 1,500 mandis across more than 20 States and UTs are now on it.
It also allows inter-mandi and inter-state trade, and FPOs can trade directly. Notice the hurdles: weak assaying labs, low inter-state trade, and States' APMC laws. The Model APLM Act, 2017 tried to fix these.
Answer as per the official UPSC answer key.
Consider the following statements :
The nation-wide 'Soil Health Card Scheme' aims at
- 1. expanding the cultivable area under irrigation.
- 2. enabling the banks to assess the quantum of loans to be granted to farmers on the basis of soil quality.
- 3. checking the overuse of fertilizers in farmlands.
Which of the above statements is/are correct ?
Answer (b) & explanation
Only statement 3 is correct (b). The Soil Health Card Scheme, launched in February 2015 at Suratgarh, Rajasthan, tests each farm's soil every two years for 12 parameters. These are macronutrients (N, P, K, S), micronutrients (Zn, Fe, Cu, Mn, Bo) and physical properties (pH, EC, organic carbon). It then recommends the right fertiliser doses, so it helps check overuse of fertilisers (3). It does nothing to expand irrigation (1), which comes under PMKSY. Banks do not use it to decide loan amounts (2).
It is now part of the Rashtriya Krishi Vikas Yojana. Notice the problem it targets: India's N:P:K ratio is far from the ideal 4:2:1 because urea is heavily subsidised, which led to neem-coated urea and nano urea.
Answer as per the official UPSC answer key.
With reference to the 'National Intellectual Property Rights Policy', consider the following statements :
- 1. It reiterates India's commitment to the Doha Development Agenda and the TRIPS Agreement.
- 2. Department of Industrial Policy and Promotion is the nodal agency for regulating intellectual property rights in India.
Which of the above statements is/are correct ?
Answer (c) & explanation
Both statements are correct (c). The National IPR Policy (May 2016), with the slogan "Creative India; Innovative India", reaffirms India's commitment to the Doha Development Agenda and the TRIPS Agreement (1). It keeps flexibilities such as compulsory licensing for public health. It made DIPP (now DPIIT) the nodal department for IPR (2), moving copyright and semiconductor layout designs there from other ministries. It has seven objectives, including awareness, IP commercialisation and enforcement.
CIPAM was set up to carry it out. Notice India's careful approach under Section 3(d) of the Patents Act, which blocks "evergreening" of drug patents, as upheld in the Novartis (Glivec) case of 2013.
Answer as per the official UPSC answer key.
Which of the following has/have occurred in India after its liberalization of economic policies in 1991 ?
- 1. Share of agriculture in GDP increased enormously.
- 2. Share of India's exports in world trade increased.
- 3. FDI inflows increased.
- 4. India's foreign exchange reserves increased enormously.
Select the correct answer using the codes given below :
Answer (b) & explanation
Statements 2, 3 and 4 are correct (b). After the 1991 reforms (the LPG model), FDI rose from almost nothing to tens of billions of dollars a year (3). Forex reserves climbed from about $1 billion in mid-1991, when India pledged gold, to over $300 billion by 2008 (4). They are now about $700 billion. India's share of world exports rose from about 0.5% to around 2% (2). Statement 1 is wrong because agriculture's share of GDP fell, from about 30% to under 20%, as services grew. Agriculture still employs about 45% of workers.
Notice this pattern: India's growth skipped a manufacturing phase and went from agriculture straight to services. That is why schemes like Make in India and PLI aim to raise manufacturing's share.
Answer as per the official UPSC answer key.
With reference to 'Quality Council of India (QCI)', consider the following statements :
- 1. QCI was set up jointly by the Government of India and the Indian Industry.
- 2. Chairman of QCI is appointed by the Prime Minister on the recommendations of the industry to the Government.
Which of the above statements is/are correct ?
Answer (c) & explanation
Both statements are correct (c). The Quality Council of India, set up in 1997, is an autonomous body formed jointly by the Government of India and industry bodies ASSOCHAM, CII and FICCI (1). It works as India's national accreditation system, through bodies such as NABL (laboratories), NABH (hospitals) and NABCB. Its chairman is appointed by the Prime Minister on the industry's recommendation (2). DPIIT (formerly DIPP) is its nodal department.
QCI also runs ZED certification for MSMEs and checks cleanliness rankings under Swachh Survekshan. Notice how it differs from BIS: QCI accredits the bodies that check quality, while BIS sets standards and issues product marks.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country.
- 2. NPCI has launched RuPay, a card payment scheme.
Which of the statements given above is/are correct ?
Answer (c) & explanation
Both statements are correct (c). The National Payments Corporation of India (NPCI), set up in 2008, is a not-for-profit company under Section 8 of the Companies Act. It was formed by banks under RBI guidance through the Payment and Settlement Systems Act, 2007. It runs RuPay (2), India's own card network, which is issued free with Jan Dhan accounts, as well as UPI, IMPS, AePS, NACH, FASTag (NETC) and BBPS. These cheap domestic payment systems support financial inclusion (1).
The international arm, NIPL, takes UPI and RuPay abroad. Notice that RuPay is now accepted in Singapore, the UAE, Bhutan and Nepal, and RuPay credit cards can link to UPI. NPCI also limits any one UPI app's share of the market.
Answer as per the official UPSC answer key.
What is the purpose of setting up of Small Finance Banks (SFBs) in India ?
- 1. To supply credit to small business units
- 2. To supply credit to small and marginal farmers
- 3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below :
Answer (a) & explanation
Statements 1 and 2 are correct (a). The RBI's 2014 guidelines say Small Finance Banks exist for financial inclusion. They offer savings services and give credit to small business units (1), small and marginal farmers (2), micro and small industries and the unorganised sector. Statement 3 is wrong because encouraging young entrepreneurs in rural areas is not a stated purpose. At least 75% of their loans must go to the priority sector, and at least half their loans must be up to ₹25 lakh.
Many SFBs, such as AU, Ujjivan and Equitas, began as NBFCs or microfinance lenders. Notice how they differ from Payments Banks: payments banks take deposits (up to ₹2 lakh) but cannot lend, and AU later applied to become a universal bank.
statement 3 sounds like a good aim. UPSC tests the RBI's stated objectives, word for word.
Answer as per the official UPSC answer key.