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.
What is/are the most likely advantages of implementing 'Goods and Services Tax (GST)'?
- 1. It will replace multiple taxes collected by multiple authorities and will thus create a single market in India.
- 2. It will drastically reduce the 'Current Account Deficit' of India and will enable it to increase its foreign exchange reserves.
- 3. It will enormously increase the growth and size of economy of India and will enable it to overtake China in the near future.
Select the correct answer using the code given below :
Answer (a) & explanation
Only statement 1 is correct (a). GST, launched on 1 July 2017 under the 101st Amendment, replaced central excise, service tax, State VAT, entry tax, octroi and other levies with one tax, collected at each stage on the value added. This created a single national market (1). Statements 2 and 3 are exaggerated. GST may help growth a little through efficiency, but "drastically" cutting the current account deficit or helping India overtake China are not results any tax reform can promise.
The GST Council (Article 279A) is chaired by the Union Finance Minister. In September 2025, the "GST 2.0" reform cut the rates to two main slabs, 5% and 18%, plus a 40% rate on sin and luxury goods. Notice the key Supreme Court case: in Mohit Minerals (2022), it said the Council's recommendations are not binding.
words like "drastically", "enormously" and "overtake China". Exaggerated claims are rarely the right answer.
Answer as per the official UPSC answer key.
Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)' ?
Answer (a) & explanation
With UPI, mobile wallets are no longer needed for online payments (a). The Unified Payments Interface, launched by NPCI in 2016, moves money straight from one bank account to another using a phone and a virtual payment address or QR code. There is no need to first load money into a mobile wallet. Option (b) is exaggerated because cash is still widely used. Option (c) has no link to FDI. Option (d) is wrong because subsidies go through DBT using the Aadhaar Payment Bridge, not UPI.
UPI now handles about 20 billion transactions a month and is going global, with links to Singapore's PayNow, the UAE and France. Notice the newer features too: UPI Lite, credit cards on UPI, and UPI 123PAY for feature phones.
option (d) sounds good and is linked to digital payments. The "most likely" direct result is the end of the need for wallets.
Answer as per the official UPSC answer key.
'Broad-based Trade and Investment Agreement (BTIA)' is sometimes seen in the news in the context of negotiations held between India and
Answer (a) & explanation
The BTIA was negotiated between India and the European Union (a). The Broad-based Trade and Investment Agreement was the name for the India–EU free trade talks that began in 2007. They stalled in 2013 over car and wine tariffs, data security and the movement of professionals. They were relaunched in 2022 as three tracks: a trade agreement, an investment protection agreement, and a geographical indications pact. India and the EU concluded the FTA on 27 January 2026 at the 16th India–EU Summit. The GCC (b), OECD (c) and SCO (d) are not linked to the BTIA.
The FTA still needs signing and ratification, and is expected to take effect around 2027. Notice the sticking point that remains: the EU's CBAM carbon border tax.
Answer as per the official UPSC answer key.
With reference to 'National Investment and Infrastructure Fund', which of the following statements is/are correct ?
- 1. It is an organ of NITI Aayog.
- 2. It has a corpus of ₹4,00,000 crore at present.
Select the correct answer using the code given below :
Answer (d) & explanation
Neither statement is correct (d). The National Investment and Infrastructure Fund (NIIF), set up in 2015, is a fund manager registered with SEBI as an Alternative Investment Fund. It was set up by the Ministry of Finance (Department of Economic Affairs), not NITI Aayog, so statement 1 is wrong. Its planned corpus was ₹40,000 crore, with the government putting in up to 49% and the rest coming from investors such as Abu Dhabi's ADIA, Temasek and AIIB. Statement 2 adds an extra zero.
It runs a Master Fund, a Fund of Funds and a Strategic Opportunities Fund. Notice the other infrastructure-finance bodies: NaBFID (2021) is a development finance institution, and the National Infrastructure Pipeline listed the projects.
the extra zero. Count the digits in big figures.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
- 2. TFA is a part of WTO's Bali Ministerial Package of 2013.
- 3. TFA came into force in January 2016.
Which of the statements given above is/are correct ?
Answer (a) & explanation
Statements 1 and 2 are correct (a). The Trade Facilitation Agreement, part of the WTO's Bali Ministerial Package (2013) (2), simplifies and speeds up customs procedures to cut trade costs. It is the WTO's first multilateral agreement since 1995. India ratified it in April 2016 (1), after linking its support to a permanent solution on food stockholding. Statement 3 is wrong because it came into force on 22 February 2017, once two-thirds of WTO members had ratified it.
India uses the SWIFT single-window and Turant Customs under its National Trade Facilitation Action Plan. Notice the Bali "peace clause", which protects India's public food stocks for the MSP and PDS from legal challenge.
a date one year early. Remember: TFA needed two-thirds ratification and got it in February 2017.
Answer as per the official UPSC answer key.
Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) ?
- 1. It decides the RBI's benchmark interest rates.
- 2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
- 3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
Answer (a) & explanation
Only statement 1 is correct (a). The Monetary Policy Committee, set up in 2016 under the amended RBI Act, 1934 (Section 45ZB), fixes the repo rate to meet the inflation target of 4% ± 2% (1). Statement 2 is wrong because it has six members, not twelve, and it is not reconstituted every year. Three are from the RBI, including the Governor as chair, who has a casting vote. Three outside experts are appointed by the government for four years. Statement 3 is wrong because the Finance Minister has no seat on it.
It meets at least four times a year, usually six. Notice that if inflation stays outside the band for three quarters in a row, the RBI must write to the government explaining why, as it did in 2022.
"12-member" and "Finance Minister". Both are invented; the six-member, Governor-led design keeps it independent.
Answer as per the official UPSC answer key.
The Global Infrastructure Facility is a/an
Answer (b) & explanation
The Global Infrastructure Facility is a World Bank collaboration for infrastructure PPPs (b). It was launched in 2014, endorsed by the G20, and is hosted by the World Bank. It helps governments prepare and structure complex public-private partnerships so that private and institutional investors, such as pension funds and insurers, will put money into them. It is not an ASEAN or ADB initiative (a), it is not a group of banks working with the OECD (c), and UNCTAD does not fund it (d).
The basic problem it tackles is that there is plenty of money, but there are few "bankable" projects. Notice the Indian versions: the India Infrastructure Project Development Fund, the Viability Gap Funding scheme, and the NIIF.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. Tax revenue as a percent of GDP of India has steadily increased in the last decade.
- 2. Fiscal deficit as a percent of GDP of India has steadily increased in the last decade.
Which of the statements given above is/are correct ?
Answer (d) & explanation
Neither statement is correct (d). Between about 2007 and 2017, India's tax-to-GDP ratio fell after the 2008 global crisis, when stimulus tax cuts were made, and recovered only later, so it did not rise steadily (1). The fiscal deficit jumped from about 2.5% of GDP in 2007-08 to about 6.5% in 2009-10. It then came down to about 3.5% by 2016-17 under the FRBM path (2). Neither figure moved "steadily" in one direction.
The word "steadily" is the trap here. Notice the current numbers: the fiscal deficit target was 4.4% for 2025-26. From 2026-27, the government moved to a debt-to-GDP anchor of about 50% by 2031, under the revised FRBM approach.
"steadily" in both statements. In a decade with a world crisis, few numbers move in a straight line.
Answer as per the official UPSC answer key.
With reference to the 'Prohibition of Benami Property Transactions Act, 1988 (PBPT Act)', consider the following statements :
- 1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
- 2. Properties held benami are liable for confiscation by the Government.
- 3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism.
Which of the statements given above is/are correct ?
Answer (b) & explanation
Only statement 2 is correct (b). The 2016 amendment to the Benami Act made benami property liable to confiscation by the government (2), along with jail of up to seven years and fines. Statement 1 is wrong because a transaction where the owner denies knowing about it, or which is held in a fictitious name, is specifically counted as benami. Statement 3 is wrong because the Act sets up four authorities: the Initiating Officer, Approving Authority, Administrator and Adjudicating Authority. It also provides an Appellate Tribunal, with further appeal to the High Court.
In Ganpati Dealcom (2022), the Supreme Court said the 2016 changes cannot apply to past transactions and struck down the 1988 penalty clause. Notice the link with India's fight against black money, alongside demonetisation and the Black Money Act, 2015.
Answer as per the official UPSC answer key.
With reference to 'National Skills Qualification Framework (NSQF)', which of the statements given below is/are correct ?
- 1. Under NSQF, a learner can acquire the certification for competency only through formal learning.
- 2. An outcome expected from the implementation of NSQF is the mobility between vocational and general education.
Select the correct answer using the code given below :
Answer (b) & explanation
Only statement 2 is correct (b). The National Skills Qualification Framework (NSQF), notified in 2013, arranges qualifications in ten levels based on what a learner can actually do. Statement 1 is wrong because certification is possible through formal, non-formal or informal learning, including Recognition of Prior Learning. Statement 2 is right because a key aim is to let learners move between vocational and general education, and between study and jobs, without losing credit.
The National Credit Framework (2023) and NEP 2020 build on this by joining vocational and academic credits. Notice the bodies involved: NCVET (2018) regulates vocational training, and Sector Skill Councils under NSDC set the job standards.
"only" in statement 1. Recognising skills learnt outside school is a core purpose of NSQF.
Answer as per the official UPSC answer key.
The term 'Domestic Content Requirement' is sometimes seen in the news with reference to
Answer (a) & explanation
Domestic Content Requirement is linked to solar power (a). Under the Jawaharlal Nehru National Solar Mission (2010), some projects had to use solar cells and modules made in India. The USA challenged this at the WTO. In 2016, the Appellate Body ruled the DCR against India's national treatment duties under GATT Article III and the TRIMs Agreement, and India changed the rule. DCR has nothing to do with foreign TV channels (b), food exports (c), or foreign university campuses (d).
India now backs local manufacturing differently: the ALMM list of approved modules, the PLI scheme for high-efficiency modules, and DCR only for government-funded projects such as PM-KUSUM and PM Surya Ghar, which WTO rules allow under government procurement.
Answer as per the official UPSC answer key.
Consider the following in respect of 'National Career Service' :
- 1. National Career Service is an initiative of the Department of Personnel and Training, Government of India.
- 2. National Career Service has been launched in a Mission Mode to improve the employment opportunities to uneducated youth of the country.
Which of the above statements is/are correct ?
Answer (d) & explanation
Neither statement is correct (d). The National Career Service (NCS), launched in July 2015, is run by the Ministry of Labour and Employment, through the Directorate General of Employment, not by DoPT, so statement 1 is wrong. Statement 2 is wrong because it is not limited to uneducated youth. It is an online portal and a network of Model Career Centres that link all job seekers with employers. It also offers career counselling, skill information and job fairs, and it modernised the old employment exchanges.
Notice the related platforms: e-Shram for unorganised workers, Skill India Digital Hub, and the Employment Linked Incentive scheme from the 2024 Budget, which encourages formal hiring.
Answer as per the official UPSC answer key.
Who among the following can join the National Pension System (NPS) ?
Answer (c) & explanation
State Government employees who join after their State notifies NPS can join (c). The National Pension System, regulated by PFRDA, is open to Indian citizens, resident or non-resident, so (a) is wrong. The age range was 18–60 then and is now 18–70, not 21–55, so (b) is wrong. It is compulsory for Central Government employees joining on or after 1 January 2004, but the Armed Forces are kept out, so (d) is wrong twice over. Each State joins from the date it notifies NPS, so (c) is correct.
The Unified Pension Scheme (UPS), in force from April 2025, now lets central employees under NPS choose an assured pension of 50% of their average last-year basic pay. Notice that some States, such as Rajasthan and Himachal, have gone back to the old pension scheme.
option (d) slips in "including those of Armed Forces". One added group spoils the whole option.
Answer as per the official UPSC answer key.
Which of the following statements best describes the term 'Scheme for Sustainable Structuring of Stressed Assets (S4A)', recently seen in the news ?
Answer (b) & explanation
S4A was an RBI scheme for reworking big companies' stressed loans (b). The Scheme for Sustainable Structuring of Stressed Assets, launched in June 2016, let banks split a large stressed loan of over ₹500 crore into two parts. The sustainable part was what the company's cash flows could repay. The unsustainable part was turned into equity or similar instruments. It was not about ecological costs (a) or disinvestment (c). It was not part of the IBC (d); it was one of several restructuring schemes before the IBC.
The RBI scrapped all such schemes, including CDR and SDR, in February 2018. Notice how stressed loans are handled now: the IBC, the RBI's June 2019 framework, and the NARCL "bad bank" (2021).
"Sustainable" makes option (a) look ecological. The words "Stressed Assets" point to bank loans.
Answer as per the official UPSC answer key.
Consider the following statements :
- 1. New Development Bank has been set up by APEC.
- 2. The headquarters of New Development Bank is in Shanghai.
Which of the statements given above is/are correct?
Answer (b) & explanation
Only statement 2 is correct (b). The New Development Bank (NDB) was set up by BRICS, not APEC, so statement 1 is wrong. The agreement was signed at the Fortaleza summit (2014), and the bank started work in 2015. Its headquarters is in Shanghai (2), and India's K. V. Kamath was its first president. Fortaleza also created the Contingent Reserve Arrangement for balance-of-payments support. APEC is an Asia-Pacific economic forum, and India is not a member.
The NDB has since added Bangladesh, the UAE, Egypt and Algeria, and Brazil's Dilma Rousseff now leads it. Notice the contrast with the AIIB (Beijing), which is a different, China-led bank, even though India is its second-largest shareholder.
APEC is an Asia-Pacific trade forum. The NDB is a BRICS bank.
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Answer as per the official UPSC answer key.
There has been a persistent deficit budget year after year. Which action/actions of the following can be taken by the Government to reduce the deficit?
- 1. Reducing revenue expenditure
- 2. Introducing new welfare schemes
- 3. Rationalizing subsidies
- 4. Reducing import duty
Select the correct answer using the code given below.
Answer (c) & explanation
A deficit falls when spending falls or revenue rises. Cutting revenue expenditure (1) and rationalising subsidies (3) both reduce spending, so the answer is (c). New welfare schemes (2) add spending, and reducing import duty (4) cuts revenue; both widen the deficit.
India's FRBM Act (2003) set the path for fiscal discipline, later revised by the N. K. Singh committee to focus on debt. Notice how this question repeats a 2015 idea with one change: a revenue-reducing step in place of expanding industries. Small changes in options test whether you truly understand the logic.
Answer as per the official UPSC answer key.
With reference to 'Stand Up India Scheme', which of the following statements is/are correct?
- 1. Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs.
- 2. It provides for refinance through SIDBI.
Select the correct answer using the code given below.
Answer (c) & explanation
Both statements are correct (c). Stand-Up India (April 2016) promotes entrepreneurship among SC/ST and women (1). Every bank branch should give at least one SC/ST and one woman borrower a loan of ₹10 lakh to ₹1 crore for a greenfield enterprise. SIDBI runs the scheme and provides refinance to banks (2), along with credit guarantee support through NCGTC.
The scheme has since been extended to 2025, and loans can also go to farm-allied activities. Notice how it sits beside Start-up India and MUDRA: MUDRA serves the smallest micro units, while Stand-Up India targets slightly bigger first-time ventures from groups that find credit hardest to get.
Answer as per the official UPSC answer key.
What is/are the purpose/purposes of Government's 'Sovereign Gold Bond Scheme' and 'Gold Monetization Scheme'?
- 1. To bring the idle gold lying with Indian households into the economy
- 2. To promote FDI in the gold and jewellery sector
- 3. To reduce India's dependence on gold imports
Select the correct answer using the code given below.
Answer (c) & explanation
Statements 1 and 3 are correct (c). Both schemes were launched in November 2015 to cut physical gold imports, which widen India's current account deficit. The Gold Monetisation Scheme lets households and temples deposit idle gold with banks and earn interest (1). Sovereign Gold Bonds, issued by the RBI for the government, give a paper alternative with 2.5% interest and gains linked to the gold price (3). Statement 2 is wrong because neither scheme has anything to do with FDI in jewellery.
The government stopped new SGB issues in 2025 because costs rose with the gold price, and medium- and long-term GMS deposits also ended. Notice how gold ETFs and IIBX (GIFT City) are the other parts of gold policy.
Answer as per the official UPSC answer key.
The establishment of 'Payment Banks' is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?
- 1. Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
- 2. Payment Banks can issue both credit cards and debit cards.
- 3. Payment Banks cannot undertake lending activities.
Select the correct answer using the code given below.
Answer (b) & explanation
Statements 1 and 3 are correct (b). Under the RBI's 2014 guidelines, resident-controlled mobile telephone companies, supermarket chains, NBFCs and others can promote Payments Banks (1). They cannot lend (3). Statement 2 is wrong: they can issue debit cards but not credit cards.
Payments Banks take deposits, now up to ₹2 lakh per customer, and offer remittances and bill payments. Examples include India Post Payments Bank and Airtel Payments Bank. They were proposed by the Nachiket Mor committee. Notice how they extend banking to the unbanked without the risks of lending.
a credit card is a loan. A bank that cannot lend cannot issue one.
Answer as per the official UPSC answer key.
The FAO accords the status of 'Globally Important Agricultural Heritage System (GIAHS)' to traditional agricultural systems. What is the overall goal of this initiative?
- 1. To provide modern technology, training in modern farming methods and financial support to local communities of identified GIAHS so as to greatly enhance their agricultural productivity
- 2. To identify and safeguard eco-friendly traditional farm practices and their associated landscapes, agricultural biodiversity and knowledge systems of the local communities
- 3. To provide Geographical Indication status to all the varieties of agricultural produce in such identified GIAHS
Select the correct answer using the code given below.
Answer (b) & explanation
Only statement 2 is correct (b). GIAHS, started by the FAO in 2002, aims to identify and safeguard traditional farming systems along with their landscapes, agro-biodiversity and local knowledge. Statement 1 is wrong because the idea is to conserve traditional practices, not to replace them with modern technology. Statement 3 is wrong because GI tags are given under national law (in India, the GI Act, 1999), not by GIAHS.
India's GIAHS sites are Koraput (Odisha), Kuttanad below-sea-level farming (Kerala) and Pampore saffron (Kashmir). Notice how this connects to in-situ conservation: protecting genes and knowledge in the living farms where they evolved, not just in seed banks.
Answer as per the official UPSC answer key.