Indian Economy Mixed Practice — MCQs with Answers (Set 12)

The RBI defines ICR as EBIT divided by interest expenses. A higher ratio means earnings cover interest more times. Principal repayment belongs to the debt service coverage ratio, not ICR.

The answer is the District Mineral Foundation (DMF). The 2015 amendment created it under Section 9B. Miners pay into it for people and areas hit by mining. The National Mineral Exploration Trust came from the same Act. It funds exploration, not local welfare.

The official UPSC key gives option (d), 3 only. Rajasthan has iron ore mines, listed in the Indian Minerals Yearbook. States do auction non-coal major minerals, so Statement 1 is wrong. Andhra Pradesh has gold resources and Jharkhand produces gold, so Statement 2 is wrong.

The Indian Bureau of Mines says Karnataka made about 99% of India’s gold in 2021-22. Jharkhand made the rest. The Hutti mine in Raichur district is the main working gold mine, and the Kolar Gold Fields closed in 2001.

States auction major minerals other than coal in their own area. Rajasthan, Madhya Pradesh and Odisha lead in blocks auctioned. The Centre auctions coal, lignite and the critical minerals in Part D.

The MMDR Amendment Act, 2015 made auctions the rule for major minerals. The Ministry of Mines says earlier grants were discretionary and not transparent. The 1957 Act is the base law that the 2015 Act amended.

Andhra Pradesh, Kerala, Himachal Pradesh, and Tripura are all genuinely recognised tea-producing states. Kangra tea from Himachal Pradesh even carries a GI tag.

The Pattiseema Lift Irrigation Project, opened in March 2016, links the Godavari to the Krishna via the Polavaram right canal — India’s first completed river-interlinking project.

The correct answer is the non-financial sector, since the government is the borrower. RBI’s FAQ says Treasury bills are short term debt instruments issued by the Government of India. The BIS lists the government sector as a borrower group. UPSC counted Treasury bills as non-financial debt in 2020. The key for Set A Q54 is option (d). RBI’s FAQ calls Treasury bills money market instruments, but the issuer is still the Government.

The correct answer is 364 days. RBI’s FAQ says Treasury bills are presently issued in three tenors. They are 91 day, 182 day and 364 day. The Department of Economic Affairs 2009-10 auction calendar also lists 91-day, 182-day and 364-day bills. RBI says dated securities generally have tenors of 5 years to 40 years.

The correct answer is non-housing retail loans. The June 2025 report says they formed 54.9 per cent of total household debt as of March 2025. It says housing loans formed 29.0 per cent. The December 2025 report calls non-housing retail loans the dominant segment. It gives 55.3 per cent of household borrowing from financial institutions as of September 2025. The two figures use different bases and dates.

The correct answer is the System of National Accounts. The BIS portal says the statistics follow the framework of the System of National Accounts. The BIS methodology note says the private non-financial sector is as defined in the System of National Accounts 2008. The BIS portal says the sectors and debt instruments follow that framework. Basel III appears in BIS Working Paper 878 for a different reason. The paper says Basel III suggests using the credit-to-GDP gap in countercyclical capital buffer frameworks.

The correct answer is households, government and non-financial corporations. The BIS portal gives the government sector and the private non-financial sector. It splits the private part into non-financial corporations and households. The same portal names domestic banks and other domestic financial corporations as lenders. So the option on banks, NBFCs and insurers does not list the three borrower groups.

The correct answer is the economic sector of the borrower. The BIS says its data capture borrowing by the government sector and the private non-financial sector. It splits the private part into non-financial corporations and households. So the breakdown on the borrowing side is by sector. Secured or unsecured, currency and maturity are not sectors.

The 2017 amendment let governments name establishments that must pay only by cheque or bank credit. The Centre used this power on 26 April 2017. The years 1976, 1996 and 2005 are not linked to this change.

India ranks first by number of organic producers, with about 2.36 million (FiBL and IFOAM). By area it ranks second, after Australia. Ranks change with source and year. PIB gave a ninth rank for area in 2020.

PKVY gives Rs 31,500 per hectare over three years. Rs 15,000 of it reaches farmers by Direct Benefit Transfer for organic inputs. The scheme began in 2015. PM-KISAN is a different scheme, and Rs 2,481 crore is the outlay of the Natural Farming Mission.

NPOP runs under the Ministry of Commerce and Industry. The Department of Commerce launched it in 2001 to support organic exports. APEDA acts as its Secretariat. The Ministry of Rural Development has no role in it.

The correct answer is high capital-output ratio (ICOR).

A country can save and invest heavily and still see weak output growth. The capital-output ratio measures how much new investment it takes to produce one extra unit of output. A high capital-output ratio means investment is being used inefficiently, so large sums of capital produce only small gains in output. This inefficiency, not administrative weakness, illiteracy, or population density, directly explains why capital formation can fail to lift output.

The correct answer is (b) 2 and 3 only. Urea’s retail price is not market-driven. It is a Maximum Retail Price fixed by the Government. The Government pays the gap to manufacturers as subsidy, so statement 1 is wrong. Ammonia is an input for urea. It is made from natural gas through steam reforming, so statement 2 is correct. Sulphur is a raw material for phosphoric acid fertilizer. It is recovered as a by-product when refineries desulphurise crude oil and gas, so statement 3 is correct.

On 20 April 2020, the May WTI futures contract settled at -$37.63 a barrel, the first time a major oil benchmark had traded below zero. Collapsing COVID-19 demand and near-full storage at Cushing, Oklahoma, the delivery point, meant some sellers briefly paid buyers to take oil off their hands.

The Indian Basket, published daily by the Petroleum Planning and Analysis Cell (PPAC), is a weighted average of Dubai/Oman (sour) crude and Brent (dated, sweet) crude, roughly 68% Dubai/Oman to 32% Brent. It reflects the actual mix of crude grades India imports, and its movements feed directly into India’s oil import bill.

Dubai/Oman is an average of Dubai and Oman crude prices, both medium, higher-sulphur (“sour”) grades. It prices most Persian Gulf crude bound for Asian refiners, including India, China, and Japan, making it the standard Asian benchmark alongside WTI (US) and Brent (global seaborne trade).

The answer is that the RBI sets India’s minimum Capital Adequacy Ratio. Each bank does not choose its own. SEBI does not set it. The RBI’s effective minimum is 11.5% of risk-weighted assets with the buffer. This was UPSC CSP 2018, Q16. Memory hook: the central bank sets the floor.

The World Values Survey asks whether most people can be trusted. More than 60% say yes in Norway and Sweden. Fewer than 10% say yes in Colombia, Brazil and Peru. So trust differs widely, and it can be compared, though survey wording needs care.