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 statements about the Rashtriya Gokul Mission :
- I. It is important for the upliftment of rural poor as majority of low producing indigenous animals are with small and marginal farmers and landless labourers.
- II. It was initiated to promote indigenous cattle and buffalo rearing and conservation in a scientific and holistic manner.
Which of the statements given above is/are correct?
Answer (c) & explanation
Both statements are correct (c). The Rashtriya Gokul Mission (December 2014) develops and conserves indigenous bovine breeds. Statement II is right: it promotes native cattle and buffalo rearing and conservation in a scientific way, through better breeding, artificial insemination and Gokul Grams. Statement I is right: most low-yielding desi animals belong to small and marginal farmers and landless labourers, so raising their milk yield helps the rural poor. Both lines come from the scheme's own description.
Notice the famous breeds: Gir, Sahiwal, Red Sindhi and Tharparkar cows, and the Murrah buffalo. The mission also uses sex-sorted semen and IVF. India is the world's largest milk producer.
Answer as per the official UPSC answer key.
Which of the following are the sources of income for the Reserve Bank of India?
- I. Buying and selling Government bonds
- II. Buying and selling foreign currency
- III. Pension fund management
- IV. Lending to private companies
- V. Printing and distributing currency notes
Select the correct answer using the code given below.
Answer (a) & explanation
Buying and selling government bonds and foreign currency earn the RBI income (a). Item I is right: the RBI earns interest on the government securities it holds and gains from trading them in open market operations. Item II is right: it earns from foreign exchange operations, such as interest on reserves and gains on selling dollars. Item III is wrong: pension funds are run under the PFRDA. Item IV is wrong: the RBI does not lend to private companies. Item V is wrong: printing notes is a cost for the RBI, not income.
Notice where the profit goes: the RBI pays a surplus (dividend) to the government each year. It paid a record ₹2.69 lakh crore for 2024-25, set under the Bimal Jalan committee framework.
statement V. Many think the RBI "makes money" by printing money. Printing is an expense; the income comes from the assets bought with that money.
Answer as per the official UPSC answer key.
Consider the following activities :
- I. Production of crude oil
- II. Refining, storage and distribution of petroleum
- III. Marketing and sale of petroleum products
- IV. Production of natural gas
How many of the above activities are regulated by the Petroleum and Natural Gas Regulatory Board in our country?
Answer (b) & explanation
The PNGRB regulates two of these activities (b). The PNGRB Act, 2006 covers the downstream sector. Item II is right: it covers refining, storage, transport and distribution of petroleum products. Item III is right: it covers marketing and sale of petroleum products and natural gas. Items I and IV are wrong: the Act specifically excludes production of crude oil and natural gas. Upstream exploration and production come under the Petroleum Ministry and the Directorate General of Hydrocarbons.
Notice the PNGRB's other jobs: authorising city gas distribution networks and gas pipelines, and fixing pipeline tariffs. Upstream blocks are now offered under the HELP policy and Open Acreage Licensing rounds.
the Board's name has "natural gas" in it, so "production of natural gas" feels covered. Production is upstream, outside the Act.
Answer as per the official UPSC answer key.
With reference to the Government of India, consider the following information :
| | Organization | Some of its functions | It works under
| I. | Directorate of Enforcement | Enforcement of the Fugitive Economic Offenders Act, 2018 | Internal Security Division-I, Ministry of Home Affairs
| II. | Directorate of Revenue Intelligence | Enforces the Provisions of the Customs Act, 1962 | Department of Revenue, Ministry of Finance
| III. | Directorate General of Systems and Data Management | Carrying out big data analytics to assist tax officers for better policy and nabbing tax evaders | Department of Revenue, Ministry of Finance
In how many of the above rows is the information correctly matched?
Answer (a) & explanation
Only one row is correctly matched (a). Row II is right: the Directorate of Revenue Intelligence (DRI) is the main anti-smuggling body, enforcing the Customs Act, 1962, under the Department of Revenue. Row I is wrong: the Enforcement Directorate does enforce the Fugitive Economic Offenders Act, 2018, along with PMLA and FEMA, but it works under the Department of Revenue, not the Home Ministry. Row III is wrong: DG Systems runs the IT systems of Customs and GST; big-data analytics to catch evaders is the job of a separate body, DGARM, under the CBIC.
Notice the trick: UPSC often gets the function right but the parent ministry wrong. Read every column. The ED was in the news for big money-laundering cases.
row III has the right parent department. The function belongs to a sister directorate with a similar name.
Answer as per the official UPSC answer key.
Suppose the revenue expenditure is ₹ 80,000 crores and the revenue receipts of the Government are ₹ 60,000 crores. The Government budget also shows borrowings of ₹ 10,000 crores and interest payments of ₹ 6,000 crores. Which of the following statements are correct?
- I. Revenue deficit is ₹ 20,000 crores.
- II. Fiscal deficit is ₹ 10,000 crores.
- III. Primary deficit is ₹ 4,000 crores.
Select the correct answer using the code given below.
Answer (d) & explanation
All three statements are correct (d). Statement I is right: revenue deficit = revenue expenditure − revenue receipts = 80,000 − 60,000 = ₹20,000 crore. Statement II is right: fiscal deficit = total borrowings = ₹10,000 crore. Statement III is right: primary deficit = fiscal deficit − interest payments = 10,000 − 6,000 = ₹4,000 crore. So options (a), (b) and (c) fail.
Notice the oddity: a fiscal deficit smaller than the revenue deficit simply means non-debt capital receipts, such as disinvestment, covered part of the gap. Primary deficit shows borrowing for needs other than past interest. India's fiscal deficit target is 4.4% of GDP for 2025-26, and the government now aims to cut its debt-to-GDP ratio.
Answer as per the official UPSC answer key.
Consider the following statements :
- I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sustainability Report (BRSR).
- II. In India, a company submitting a BRSR makes disclosures in the report that are largely non-financial in nature.
Which of the statements given above is/are correct?
Answer (b) & explanation
Only statement II is correct (b). Statement II is right: the Business Responsibility and Sustainability Report (BRSR) asks for disclosures on environment, social and governance (ESG) matters, such as emissions, water, waste, employees and community. These are largely non-financial. Statement I is wrong on two counts: the BRSR is a SEBI requirement (2021), not the RBI's, and it applies to the top 1,000 listed companies by market value, not all listed companies. So options (a), (c) and (d) fail.
Notice BRSR Core, a smaller set of key indicators that needs outside assurance, being phased in for the largest firms. The idea is to stop greenwashing, meaning false claims of being green, and help investors compare companies.
two errors in one line: wrong regulator and "all". Either one is enough to reject it.
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Answer as per the official UPSC answer key.
India is one of the founding members of the International North-South Transport Corridor (INSTC), a multimodal transportation corridor, which will connect
Answer (a) & explanation
INSTC links India to Central Asia and Europe via Iran (a). The International North–South Transport Corridor was agreed in 2000 by India, Iran and Russia. Goods go by sea from Mumbai to Bandar Abbas or Chabahar in Iran, then by road and rail through Iran, the Caspian region and Central Asia to Russia and on to Europe. Option (b) is wrong: it does not pass through China. Option (c) is wrong: that describes routes like the Trilateral Highway. Option (d) is wrong: Azerbaijan is one route inside the corridor, not its whole.
Notice its value: it is shorter and cheaper than the Suez route. India runs a terminal at Chabahar under a 10-year deal (2024). The IMEC corridor via the Gulf is another route.
option (d) names a real transit country. The full path in (a), via Iran, is the defining one.
Answer as per the official UPSC answer key.
Consider the following statements :
Statement I :
In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax.
Statement II :
In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961.
Which one of the following is correct in respect of the above statements?
Answer (d) & explanation
Statement I is wrong, Statement II is right (d). Statement II is right: rural agricultural land is excluded from the meaning of "capital asset" under Section 2(14) of the Income-tax Act, so its sale attracts no capital gains tax. Statement I is wrong: only agricultural income, from land used for cultivation as defined in Section 2(1A), is exempt. Poultry, dairy and wool rearing do not use land for cultivation, so their income is taxable like business income. So options (a), (b) and (c) fail.
Notice that the power to tax agricultural income lies with the States (State List, Entry 46), not the Centre. The new Income-tax Act, 2025, replacing the 1961 Act from April 2026, keeps this exemption.
"allied agricultural activities" sounds like agriculture. For tax law, only income from the land itself counts.
Answer as per the official UPSC answer key.
Consider the following statements :
Statement I :
Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.
Statement II :
Unlike in the United States of America where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.
Which one of the following is correct in respect of the above statements?
Answer (d) & explanation
Statement I is wrong, Statement II is right (d). Statement II is right: the USA makes ethanol mostly from corn (maize), while Brazil uses sugarcane. Statement I is wrong: it reverses the ranking. The USA is the largest ethanol producer, with over half of world output; Brazil is second. So options (a), (b) and (c) fail.
Notice India's place: now third, using cane juice, molasses, and surplus grains such as rice and maize. India reached 20% ethanol blending in petrol (E20) in 2025, five years ahead of the old target. The Global Biofuels Alliance, launched at India's G20 in 2023, includes the USA and Brazil.
Brazil's ethanol cars are famous, so it "feels" like number one. The USA produces more.
Answer as per the official UPSC answer key.
Consider the following statements :
- I. India has joined the Minerals Security Partnership as a member.
- II. India is a resource-rich country in all the 30 critical minerals that it has identified.
- III. The Parliament in 2023 has amended the Mines and Minerals (Development and Regulation) Act, 1957 empowering the Central Government to exclusively auction mining lease and composite license for certain critical minerals.
Which of the statements given above are correct?
Answer (c) & explanation
Statements I and III are correct (c). Statement I is right: India joined the US-led Minerals Security Partnership in June 2023, to secure supply chains for critical minerals. Statement III is right: the MMDR Amendment Act, 2023, let the Centre alone auction mining leases and composite licences for 24 critical and strategic minerals. Statement II is wrong: India listed 30 critical minerals in 2023, but must import many of them, such as lithium, cobalt and nickel. So options (a), (b) and (d) fail.
Notice the National Critical Mineral Mission (2025) and KABIL, a state firm that buys mineral assets abroad, such as lithium blocks in Argentina. China dominates the processing of most of these minerals.
"all the 30". India drew up the list because it lacks many of them.
Answer as per the official UPSC answer key.
A country's fiscal deficit stands at ₹50,000 crores. It is receiving ₹10,000 crores through non-debt creating capital receipts. The country's interest liabilities are ₹1,500 crores. What is the gross primary deficit?
Answer (a) & explanation
The gross primary deficit is ₹48,500 crore (a). Gross primary deficit = gross fiscal deficit − interest payments = 50,000 − 1,500 = ₹48,500 crore. Non-debt capital receipts are already counted inside the fiscal deficit, so they play no further part. That figure is there only to tempt you into adding or subtracting it. Option (b), ₹51,500 crore, wrongly adds interest. Option (c), ₹58,500 crore, wrongly brings in the non-debt receipts. Option (d) fails because (a) is right.
Notice what each deficit tells you: fiscal deficit shows total borrowing need; primary deficit removes the burden of past debt; revenue deficit shows borrowing to meet day-to-day spending. A primary surplus means today's spending is covered without new debt, apart from interest.
the ₹10,000 crore figure. Subtract it and you get a wrong answer; add it and you land on (c).
Answer as per the official UPSC answer key.
Consider the following statements :
Statement I :
As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II :
Bondholders are lenders to a company whereas stockholders are its owners.
Statement III :
For repayment purpose, bond-holders are prioritized over stockholders by a company.
Which one of the following is correct in respect of the above statements?
Answer (a) & explanation
Both II and III are correct and both explain Statement I (a). Statement II is right: a bondholder is a lender, and the company must pay a fixed interest whether it earns a profit or not; a stockholder is an owner and gets a dividend only if there is profit. Statement III is right: if the company closes, lenders are paid first and owners get what is left. Both reasons explain why bonds carry lower risk, so options (b), (c) and (d) fail.
Notice the trade-off: lower risk means lower returns. Stockholders can gain much more when the company grows. In India's Insolvency and Bankruptcy Code (2016), secured creditors rank high in the payout order and equity shareholders come last.
Answer as per the official UPSC answer key.
Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct?
- I. It has recommended grants of ₹4,800 crores from the year 2022-23 to the year 2025-26 for incentivizing States to enhance educational outcomes.
- II. 45% of the net proceeds of Union taxes are to be shared with States.
- III. ₹45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms.
- IV. It reintroduced tax effort criteria to reward fiscal performance.
Select the correct answer using the code given below.
Answer (c) & explanation
Statements I, III and IV are correct (c). The 15th Finance Commission, chaired by N.K. Singh, made these recommendations. Statement I is right: it gave ₹4,800 crore of grants for better educational outcomes. Statement III is right: it kept ₹45,000 crore as an incentive for agricultural reforms. Statement IV is right: it brought back tax effort, with a 2.5% weight, in the devolution formula. Statement II is wrong: it fixed the States' share at 41% for 2021-26, not 45%; the 14th FC had given 42%.
Notice the drop to 41%: it reflected the move of Jammu and Kashmir to a Union Territory. The 16th Finance Commission, under Arvind Panagariya, kept the share at 41% for 2026-31.
the number 45 appears twice. It is right for the agriculture incentive (₹45,000 crore), wrong for the tax share (41%).
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Answer as per the official UPSC answer key.
Consider the following statements :
- I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
- II. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time.
- III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
Which of the statements given above are correct?
Answer (a) & explanation
Statements I and II are correct (a). Statement I is right: by 2024, India's NSE accounted for most of the equity options contracts traded in the world, a huge boom. Statement II is right: in January 2024, India's stock market value passed Hong Kong's to become the fourth largest. Statement III is wrong: SEBI regulates the market. It warned that about 9 out of 10 small traders in futures and options lose money, and it acts against unregistered advisers and "finfluencers".
Notice the later steps: SEBI tightened F&O rules from late 2024, with bigger contract sizes and fewer weekly expiries, to cool this speculation. Options let you bet on price moves with a small upfront cost, which is why so many lose.
Answer as per the official UPSC answer key.
Consider the following statements in respect of the International Bank for Reconstruction and Development (IBRD) :
- I. It provides loans and guarantees to middle income countries.
- II. It works single-handedly to help developing countries to reduce poverty.
- III. It was established to help Europe rebuild after the World War II.
Which of the statements given above are correct?
Answer (c) & explanation
Statements I and III are correct (c). Statement III is right: the IBRD, set up at Bretton Woods in 1944, was meant to rebuild war-torn Europe; its first loan went to France in 1947. Statement I is right: today it gives loans and guarantees to middle-income and creditworthy poorer countries. Statement II is wrong: it works with the IDA, IFC, MIGA and ICSID as the World Bank Group, so "single-handedly" is wrong.
Notice the split: the IDA gives soft loans and grants to the poorest countries, the IFC lends to the private sector, and MIGA gives risk insurance. India is one of the IBRD's largest borrowers, and is not a member of ICSID. The World Bank's twin is the IMF.
"single-handedly". A Bank with four sister bodies does not work alone.
Answer as per the official UPSC answer key.
Consider the following statements :
Statement I :
Circular economy reduces the emissions of greenhouse gases.
Statement II :
Circular economy reduces the use of raw materials as inputs.
Statement III :
Circular economy reduces wastage in the production process.
Which one of the following is correct in respect of the above statements?
Answer (a) & explanation
Both II and III are correct and both explain Statement I (a). A circular economy replaces "take, make, throw" with reduce, reuse, repair and recycle. Statement II is right: it cuts fresh raw material use, saving the energy of mining and processing. Statement III is right: it cuts waste in production, avoiding the emissions of landfills and burning. Both explain Statement I, that it lowers greenhouse gases, so options (b), (c) and (d) fail.
Notice India's tools: Extended Producer Responsibility (EPR) rules for plastic, e-waste and batteries, and Mission LiFE (Lifestyle for Environment). Steel scrap recycling and vehicle scrapping policy also fit this idea, as does biogas from waste under GOBARdhan.
Answer as per the official UPSC answer key.
Consider the following statements in respect of RTGS and NEFT :
- I. In RTGS, the settlement time is instantaneous while in case of NEFT, it takes some time to settle payments.
- II. In RTGS, the customer is charged for inward transactions while that is not the case for NEFT.
- III. Operating hours for RTGS are restricted on certain days while this is not true for NEFT.
Which of the statements given above is/are correct?
Answer (a) & explanation
Only statement I is correct (a). Statement I is right: RTGS settles each payment one by one, in real time, while NEFT settles in half-hourly batches, so it takes a little time. Statement II is wrong: no bank charges for inward RTGS or NEFT credits; the RBI also waived its charges on outward online transfers for savings accounts. Statement III is wrong: both systems run 24×7, 365 days: NEFT since December 2019 and RTGS since December 2020. So options (b), (c) and (d) fail.
Notice the limits: RTGS has a minimum of ₹2 lakh, with no upper limit; NEFT has no minimum. IMPS and UPI, run by NPCI, give instant transfers too. The RBI runs RTGS and NEFT itself.
statement III was true before 2020. UPSC often tests the latest position, not what older books say.
Answer as per the official UPSC answer key.
With reference to the sectors of the Indian economy, consider the following pairs :
| | Economic activity | Sector
| 1. | Storage of agricultural produce | Secondary
| 2. | Dairy farm | Primary
| 3. | Mineral exploration | Tertiary
| 4. | Weaving cloth | Secondary
How many of the pairs given above are correctly matched ?
Answer (b) & explanation
Two pairs are correctly matched (b). The primary sector takes things directly from nature: farming, dairy, fishing, forestry, mining and mineral exploration. The secondary sector changes the form of goods: weaving, manufacturing, construction. The tertiary sector gives services: transport, trade, storage, banking. Pair 2 is right: a dairy farm is primary. Pair 4 is right: weaving cloth is secondary. Pair 1 is wrong: storage of farm produce is a tertiary service. Pair 3 is wrong: mineral exploration is primary.
Notice India's mix: services give over half of GDP, while farming still employs about 45% of workers. This gap, with low manufacturing, is why India pushes Make in India and PLI schemes.
storage happens in a warehouse building, so it feels industrial. It changes nothing in the goods; it is a service.
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Answer as per the official UPSC answer key.
With reference to the Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) Yojana, consider the following statements :
- 1. The entry age group for enrolment in the scheme is 21 to 40 years.
- 2. Age specific contribution shall be made by the beneficiary.
- 3. Each subscriber under the scheme shall receive a minimum pension of ₹3,000 per month after attaining the age of 60 years.
- 4. Family pension is applicable to the spouse and unmarried daughters.
Which of the statements given above is/are correct ?
Answer (b) & explanation
Statements 2 and 3 are correct (b). The PM Shram Yogi Maan-dhan (PM-SYM, 2019) is a voluntary pension scheme for unorganised workers earning up to ₹15,000 a month. Statement 2 is right: the worker pays an age-based monthly amount, and the Centre adds an equal sum. Statement 3 is right: from 60, the subscriber gets an assured ₹3,000 a month. Statement 1 is wrong: entry age is 18 to 40, not 21 to 40. Statement 4 is wrong: on death, only the spouse gets 50% as family pension, not unmarried daughters.
Notice a similar scheme for traders, the NPS-Traders scheme, and Atal Pension Yojana. Workers enrol through Common Service Centres and the e-Shram portal.
two numbers changed slightly: 21 instead of 18, and daughters added to the family pension.
Answer as per the official UPSC answer key.
With reference to physical capital in Indian economy, consider the following pairs :
| | Items | Category
| 1. | Farmer's plough | Working capital
| 2. | Computer | Fixed capital
| 3. | Yarn used by the weaver | Fixed capital
| 4. | Petrol | Working capital
How many of the above pairs are correctly matched ?
Answer (b) & explanation
Two pairs are correctly matched (b). Fixed capital is used again and again over many years: a plough, a computer, a machine, a building. Working capital is used up in one round of production: raw materials like yarn, and fuel like petrol, plus cash in hand. Pair 2 is right: a computer is fixed capital. Pair 4 is right: petrol is working capital. Pair 1 is wrong: a farmer's plough is fixed capital. Pair 3 is wrong: yarn used by a weaver is working capital.
Notice that this idea comes straight from the NCERT Class IX economics chapter "The Story of Village Palampur". It lists four factors of production: land, labour, physical capital and human capital.
Answer as per the official UPSC answer key.