💰 UPSC + MPSC Economy Special 2026
50 Indian Economy &
Current Affairs Q&A
Complete practice set with detailed answers — GDP, Budget 2025-26, RBI, Banking, GST, Trade, Schemes, Economic Survey 2026 & more!
50
Q&A with full answers
7.4%
India GDP FY26
$825B
Total exports FY25
$701B
Forex reserves Jan 2026
10
Topic categories
Economy contributes 12–20 questions in every UPSC Prelims and is the most current-affairs-linked section. This 50 Q&A set covers everything from Economic Survey 2026 to Budget highlights, RBI policy to GST collections — with every answer fully explained in plain language. Perfect for UPSC, MPSC, MPPSC, and all State PSC aspirants! 🎯
📊 India Economy — Key Numbers 2025-26 (Must Know for Exam)
7.4%
Real GDP Growth FY26
4.4%
Fiscal Deficit % of GDP
$825B
Total Exports FY25
$135B
Remittances FY25 (World #1)
$701B
Forex Reserves Jan 2026
2.2%
Gross NPA (Multi-decadal low)
9.2Cr
Income Tax Return Filers
₹17.4L Cr
GST Collection Apr–Dec 2025
📈
Part A — GDP, National Income & Macro Basics
GDP · GNP · NDP · Deflator · Base Year
1
GDPUPSC + MPSC
India's GDP base year was recently updated from 2011-12 to 2022-23 in February 2026. Which ministry/body made this revision?
ANSWER
Ministry of Statistics and Programme Implementation (MoSPI) updated the GDP base year from 2011-12 to 2022-23 in February 2026. This was done to better reflect the post-pandemic, digital-first Indian economy. The new base year accounts for: explosion of the digital economy, surge in renewable energy, and radical changes in post-COVID consumption patterns. India also introduced Double Deflation for the manufacturing sector under the new series.
🎯 Prelims Trick: MoSPI = GDP data publisher; CEA = Economic Survey author
2
GDP ConceptsStatic
What is the difference between GDP at Market Price and GDP at Factor Cost? Which measure does India primarily use now?
ANSWER
GDP at Market Price = value of all final goods/services at prices consumers pay (includes taxes, excludes subsidies). GDP at Factor Cost = value at input costs (excludes taxes, includes subsidies). Relationship: GDP at Factor Cost = GDP at Market Price − Net Indirect Taxes (Taxes − Subsidies). India now uses Gross Value Added (GVA) at Basic Prices as the primary measure (since 2015 revision), replacing GDP at Factor Cost. GDP at Market Price = GVA at Basic Prices + Net Taxes on Products.
3
Economic Survey 2026Current Affairs
What is India's estimated real GDP growth rate for FY 2025-26 as per the Economic Survey 2025-26?
ANSWER
The Economic Survey 2025-26 (released 29 January 2026, ahead of Union Budget) estimated India's real GDP growth at 7.4% for FY26. The FY27 projection is in the range of 6.8% to 7.2%. Key growth drivers: strong domestic consumption, capital formation, robust services sector, and improving manufacturing. The Economic Survey is prepared by the Department of Economic Affairs under the supervision of the Chief Economic Adviser (CEA).
🎯 Economic Survey = Diagnosis | Union Budget = Prescription
4
National IncomeStatic
What is the formula connecting GDP, GNP, NDP, and NNP? Which measure best reflects the welfare of residents?
ANSWER
GNP = GDP + Net Factor Income from Abroad (NFIA). NDP = GDP − Depreciation (Capital Consumption). NNP = GNP − Depreciation. National Income = NNP at Factor Cost. Per Capita NNP at Factor Cost is considered the best welfare indicator for residents as it: accounts for income of citizens abroad (GNP), deducts depreciation (net), removes indirect taxes (factor cost), and adjusts for population (per capita). India is classified as a Lower-Middle Income country by World Bank (GNI per capita $1,046–$4,095).
5
InflationStatic + Current
What is the difference between CPI and WPI inflation? Which is used by the RBI as its primary inflation target?
ANSWER
CPI (Consumer Price Index): Measures change in prices of goods/services purchased by consumers — reflects retail-level inflation experienced by households. Released by MoSPI. Base year: 2012. WPI (Wholesale Price Index): Measures price changes at wholesale/producer level — reflects supply chain inflation. Released by Office of the Economic Adviser (DPIIT). The RBI uses CPI (Headline) as its primary inflation target under the Flexible Inflation Targeting (FIT) framework. The current inflation target is 4% ± 2% (i.e., 2%–6% band), mandated by the RBI Act amendment of 2016.
6
SectorsUPSC + MPSC
What percentage of India's GDP comes from the Services sector, and which sector employs the most people?
ANSWER
India's sectoral GDP composition (approximate, FY25): Services: ~55% of GDP (largest contributor) | Industry (including manufacturing): ~27% | Agriculture: ~16% (but employs ~45% of workforce). This mismatch — agriculture employing nearly half the population while contributing only 16% of GDP — is a structural challenge. India's services exports hit an all-time high of $387.6 billion in FY25, driven by IT, software, financial services, and tourism.
🎯 India = Services-driven economy; Employment = Agriculture-driven
7
PovertyStatic
India uses which poverty measurement methodology officially? What is the Multidimensional Poverty Index (MPI)?
ANSWER
India's official poverty line is based on consumption expenditure data (Household Consumer Expenditure Survey — HCES). Historically used Tendulkar Committee (2009) and Rangarajan Committee (2014) methodologies. The MPI (Multidimensional Poverty Index) by UNDP/OPHI measures poverty across 3 dimensions and 10 indicators: Health (nutrition, child mortality), Education (years of schooling, attendance), Living Standards (cooking fuel, sanitation, water, electricity, housing, assets). NITI Aayog publishes India's National MPI. India lifted 415 million people out of multidimensional poverty between 2005-06 and 2019-21.
8
Viksit BharatCurrent Affairs
What is "Viksit Bharat 2047"? What is India's income target to achieve developed-country status?
ANSWER
Viksit Bharat 2047 (Developed India 2047) is India's vision to become a High-Income, Developed Nation by 2047 — the centenary of Independence. A country achieves high-income status when per capita GNI exceeds $13,936 (World Bank threshold, 2024). India's current per capita income is ~$2,600 — needing roughly 5× increase. The Economic Survey 2026 outlines that India must sustain 8%+ growth for two decades, escape the Middle-Income Trap, and transition workers from agriculture to manufacturing and services.
9
GDP DeflatorStatic
What is the GDP Deflator, and how is Nominal GDP converted to Real GDP?
ANSWER
The GDP Deflator is a broad measure of inflation that covers all goods and services in the economy (broader than CPI or WPI). Formula: GDP Deflator = (Nominal GDP ÷ Real GDP) × 100. Nominal GDP = GDP measured at current year prices (includes both price changes + real output changes). Real GDP = GDP measured at constant base year prices (removes price effect — measures only actual output growth). Real GDP = Nominal GDP ÷ GDP Deflator × 100. Real GDP growth is the true measure of economic progress; Nominal GDP growth can be inflated by price rise.
10
Fiscal PolicyBudget 2025-26
What is India's fiscal deficit target for FY 2025-26 as per Union Budget 2025-26, and under which fiscal consolidation roadmap?
ANSWER
India's fiscal deficit target for FY 2025-26 is 4.4% of GDP (as per Union Budget 2025-26 presented by FM Nirmala Sitharaman on 1 February 2025). India is on a fiscal consolidation path under the Fiscal Responsibility and Budget Management (FRBM) Act, 2003, which mandates reducing fiscal deficit to 3% of GDP as the medium-term target. Revenue deficit target for FY26: 1.5% of GDP. Capital expenditure allocation was ~₹11.21 lakh crore for FY26 — maintaining high public investment to drive growth.
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Part B — RBI, Monetary Policy & Banking
Repo Rate · CRR · SLR · NPA · Monetary Tools
11
Repo RateCurrent Affairs
What is the Repo Rate, and how does it affect the common person? What was the RBI's stance in early 2026?
ANSWER
Repo Rate = the rate at which the RBI lends short-term money to commercial banks. It is the primary policy rate. Impact on common person: when Repo Rate ↑ → bank borrowing from RBI becomes costly → banks raise home loan, car loan, EMI rates → credit becomes expensive → demand slows → inflation cools. When Repo Rate ↓ → cheaper borrowing → lower EMIs → economic stimulus. The RBI's Monetary Policy Committee (MPC) meets 6 times a year and sets the Repo Rate. In February 2026, RBI cut the Repo Rate by 25 bps to support growth amid global uncertainty — a shift toward an accommodative stance.
🎯 Repo Rate Feb 2026: ~6.25% (after 25 bps cut)
12
CRR & SLRStatic
What is the difference between CRR, SLR, and MSF? Which earns interest for banks?
ANSWER
CRR (Cash Reserve Ratio): % of Net Demand and Time Liabilities (NDTL) banks must maintain as cash with RBI. Banks earn NO interest on CRR. SLR (Statutory Liquidity Ratio): % of NDTL banks must maintain as liquid assets (gold, govt securities, cash). Banks CAN earn interest on SLR-eligible securities. MSF (Marginal Standing Facility): Emergency overnight borrowing from RBI at Repo Rate + 25 bps — last resort. Banks can borrow up to 2% of SLR. Bank Rate: Rate for long-term borrowing from RBI (usually = MSF rate). RBI uses CRR & SLR as quantitative credit control tools.
13
BankingCurrent Affairs
India's Gross NPA ratio hit a multi-decadal low in 2025. What are NPAs and why is this significant?
ANSWER
NPA (Non-Performing Asset) = a loan where interest/principal is overdue for more than 90 days. Gross NPA % = Total NPAs ÷ Total Advances. As per Economic Survey 2026, India's Gross NPAs declined to 2.2% in September 2025 — a multi-decadal low (from peak of ~11% in 2018). Net NPAs declined to 0.5%. This reflects: improved credit discipline, IBC (Insolvency and Bankruptcy Code) recoveries, and better risk management. Strong bank balance sheets enable more credit to industry, supporting investment and growth. The IBC 2016 is the most effective NPA resolution tool.
🎯 Gross NPA 2025: 2.2% (record low) | Net NPA: 0.5%
14
Open Market OperationsStatic
What are Open Market Operations (OMOs) of the RBI? How do they affect money supply?
ANSWER
OMOs are the buying and selling of Government Securities (G-Secs) by the RBI in the open market to regulate liquidity (money supply). RBI buys G-Secs → injects money into banking system → increases liquidity → used when economy needs stimulus (expansionary). RBI sells G-Secs → absorbs money from banking system → reduces liquidity → used to control inflation (contractionary). OMOs are qualitative credit control tools. Related: Liquidity Adjustment Facility (LAF) = overnight Repo & Reverse Repo operations. MSS (Market Stabilisation Scheme) = sterilisation of capital inflows.
15
Digital BankingCurrent Affairs
What is the Unified Payments Interface (UPI)? What milestone did UPI cross in terms of transactions in 2025?
ANSWER
UPI (Unified Payments Interface) is India's real-time interbank payment system developed by NPCI (National Payments Corporation of India) and launched in 2016. It enables instant 24/7 fund transfers between bank accounts using a smartphone. In 2025, UPI crossed 16 billion transactions per month — making India the largest real-time payments market in the world. UPI now operates internationally in countries like Singapore, UAE, France, UK, Sri Lanka, Nepal, and Bhutan. UPI123Pay enables UPI without internet; UPI Lite allows small offline transactions.
🎯 NPCI (established 2008) = RBI + Banks consortium; runs UPI, RuPay, IMPS, NACH
16
Monetary PolicyStatic
What is the Monetary Policy Committee (MPC) of the RBI? Who are its members?
ANSWER
The MPC (Monetary Policy Committee) was established in 2016 by amending the RBI Act, 1934. It is a 6-member statutory committee responsible for setting the benchmark interest rate (Repo Rate) to achieve the inflation target of 4% ± 2%. Members: (1) RBI Governor (Chairperson), (2) Deputy Governor (monetary policy), (3) RBI Executive Director, (4) 3 External Members appointed by the Central Government. Meetings: 6 times a year. Decisions by majority — RBI Governor has casting vote in case of tie. The MPC model moved India from a discretionary monetary policy to a rule-based, transparent system.
17
Priority SectorStatic
What is Priority Sector Lending (PSL)? What is the mandatory PSL target for commercial banks?
ANSWER
PSL (Priority Sector Lending) is RBI's mandate for banks to lend a specified portion of their credit to sectors needing affordable credit — agriculture, MSMEs, education, housing, renewable energy. The PSL target for: Domestic commercial banks & foreign banks with 20+ branches: 40% of ANBC (Adjusted Net Bank Credit). Sub-targets: Agriculture: 18% (8% to small/marginal farmers), Micro enterprises: 7.5%, Weaker sections: 12%. Banks falling short of PSL targets must invest in RIDF (Rural Infrastructure Development Fund) maintained with NABARD.
18
NBFCStatic
What is an NBFC (Non-Banking Financial Company)? How is it different from a commercial bank?
ANSWER
An NBFC is a company registered under the Companies Act that is engaged in financial activities like loans, investments, chit funds, leasing, hire purchase, but is NOT a bank. Key differences: (1) NBFCs cannot accept demand deposits (current/savings accounts); (2) NBFCs are not part of payment/settlement system; (3) NBFCs cannot issue cheques; (4) Deposit insurance (DICGC) does NOT apply to NBFCs. Regulated by RBI. Examples: HDFC Ltd (before merger), Bajaj Finance, Power Finance Corporation, Muthoot Finance. NBFCs are critical for credit in sectors underserved by banks — MSMEs, microfinance, gold loans.
19
IBCCurrent Affairs
The Insolvency and Bankruptcy Code (IBC) 2016 is considered a landmark economic reform. What is its key purpose?
ANSWER
The IBC 2016 consolidated and amended laws relating to insolvency resolution of corporates, partnership firms, and individuals. Before IBC, NPA resolution took 4–10 years through multiple laws (SARFAESI, DRT, BIFR). IBC mandated resolution within 180 days (extendable to 270 days). The National Company Law Tribunal (NCLT) is the adjudicating authority. IBC has resolved over ₹3.5 lakh crore of stressed assets since 2016. The decline of Gross NPAs to 2.2% in 2025 is partly attributable to IBC's effectiveness. It improved India's Ease of Doing Business ranking significantly in "Resolving Insolvency" category.
20
Mutual FundsCurrent Affairs
How many unique mutual fund investors does India have as of 2025, and what does this indicate?
ANSWER
The number of unique mutual fund investors crossed 12 crore (120 million) in September 2025, with nearly 25% being women, reflecting widening financial inclusion. Mutual fund penetration expanded significantly beyond metros, with a growing share of investors from non-Tier I and II cities. This indicates: (1) Growing financial literacy; (2) Formalisation of savings; (3) Growing domestic institutional investor base reducing India's market dependence on FII flows. SEBI (Securities and Exchange Board of India) regulates mutual funds. The industry's AUM (Assets Under Management) crossed ₹68 lakh crore in 2025.
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Part C — Union Budget 2025-26, GST & Taxation
Budget Highlights · GST · Direct Tax · Fiscal Policy
21
Budget 2025-26Current Affairs
Union Budget 2025-26 introduced a new income tax slab structure. What is the tax on income between ₹12–16 lakh?
ANSWER
New Income Tax Slabs (Budget 2025-26, new regime): Up to ₹4 lakh: Nil | ₹4–8 lakh: 5% | ₹8–12 lakh: 10% | ₹12–16 lakh: 15% | ₹16–20 lakh: 20% | ₹20–24 lakh: 25% | Above ₹24 lakh: 30%. Key change: Income up to ₹12 lakh is effectively tax-free due to rebate under Section 87A (for non-capital gains income). This was one of the most significant tax relief measures in recent budgets, benefiting the middle class significantly.
🎯 ₹12–16 lakh = 15% | Above ₹24 lakh = 30% (peak slab)
22
GSTCurrent Affairs
What were India's total GST collections from April to December 2025, and which Constitutional Amendment introduced GST?
ANSWER
Gross GST collections during April–December 2025 stood at ₹17.4 lakh crore, registering a 6.7% year-on-year growth (Economic Survey 2026). GST (Goods and Services Tax) was introduced by the 101st Constitutional Amendment Act, 2016. GST came into effect on 1 July 2017 — subsumed 17 Central and State taxes including VAT, Service Tax, Excise Duty. The GST Council (Article 279A) recommends rates: 0%, 5%, 12%, 18%, 28% slabs. CGST + SGST on intra-state; IGST on inter-state and imports.
23
Government RevenueCurrent Affairs
What is "Tax Buoyancy" and how has India's direct tax base expanded as per Economic Survey 2026?
ANSWER
Tax Buoyancy = % change in Tax Revenue ÷ % change in GDP. A buoyancy >1 means taxes grow faster than the economy — indicates formalisation and improved compliance. Centre's revenue receipts increased to 9.2% of GDP in FY25 (up from ~8.5% pre-pandemic average), reflecting improved tax buoyancy. The direct tax base expanded significantly — income tax return filers increased from 6.9 crore in FY22 to 9.2 crore in FY25, indicating better compliance and economic formalisation. This is attributed to digitisation (GST, faceless assessment, Aadhaar-PAN linking).
24
CapexBudget 2025-26
What is Capital Expenditure (Capex), and why is it considered a better form of government spending than Revenue Expenditure?
ANSWER
Capital Expenditure (Capex) = Government spending on creation of long-term assets — roads, railways, airports, hospitals, schools, machinery. Revenue Expenditure = Spending on day-to-day government operations — salaries, subsidies, interest payments (no asset creation). Capex is better because: (1) Creates productive assets that generate returns for years; (2) Has a multiplier effect — ₹1 of capex generates >₹1 of GDP growth; (3) Attracts private investment (crowding-in). Budget 2025-26 allocated ~₹11.21 lakh crore for capex. The effective capex (including grants to states for asset creation) rose to ~4% of GDP in FY25.
25
PLI SchemeCurrent Affairs
What is the Production Linked Incentive (PLI) Scheme? Which sectors does it cover?
ANSWER
The PLI Scheme provides financial incentives to manufacturers in India based on their incremental sales from products manufactured in India. It aims to attract investment, create domestic manufacturing champions, and boost exports. PLI covers 14 key sectors including: Mobile phones & electronics, Pharmaceuticals, Medical devices, Telecom & networking, White goods (ACs & LEDs), Food processing, Textiles, Automobiles & auto components, Advanced chemistry cell batteries, Solar PV modules, Specialty steel, Drones. Total outlay: ~₹1.97 lakh crore. The Economic Survey 2026 highlights PLI as a catalyst for electronics and semiconductor growth.
26
PM Gati ShaktiCurrent Affairs
What is PM Gati Shakti National Master Plan, and what is its primary objective?
ANSWER
PM Gati Shakti National Master Plan (launched October 2021) is an integrated digital platform for multi-modal infrastructure connectivity planning. It integrates the infrastructure planning of 16 Ministries including Railways, Highways, Ports, Waterways, Aviation, and Logistics on a single GIS-based platform. Objective: eliminate silos in infrastructure development, reduce logistics costs (currently ~13–14% of GDP vs global best of 8%), and improve India's Logistics Performance Index ranking. It serves as the foundation for the National Logistics Policy (2022).
27
Space EconomyBudget 2025-26
Union Budget 2025-26 announced a ₹1,000 crore venture capital fund for the Space Economy. What is India's target for this sector?
ANSWER
Union Budget 2025-26 announced a ₹1,000 crore venture capital fund to scale up the Space Economy. India's target is to increase the space economy 5 times in the next 10 years — from ~$8.4 billion today to ~$44 billion. India has opened the space sector to private players through IN-SPACe (Indian National Space Promotion and Authorisation Centre), established in 2020. NewSpace India Limited (NSIL) is the commercial arm of ISRO. Key private players include Agnikul Cosmos, Skyroot Aerospace, Dhruva Space. India's launch vehicle market and satellite manufacturing are the primary growth areas.
28
Consolidated FundStatic
What are the three government funds — Consolidated Fund of India, Contingency Fund, and Public Account? Which requires Parliament's approval?
ANSWER
1. Consolidated Fund of India (Article 266): All government revenues and borrowings go here; ALL expenditure requires Parliament's approval (via Appropriation Bill). Most important fund. 2. Contingency Fund (Article 267): Emergency fund held at President's disposal for unforeseen expenditure; ₹500 crore; Parliament's approval taken afterwards (post-facto). 3. Public Account (Article 266): Money held by government as trustee — provident funds, small savings, deposits; Parliament's approval NOT required. Key: Consolidated Fund requires Parliament approval; Contingency Fund does not in advance; Public Account never does.
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Part D — Trade, Forex, Remittances & International Economy
Exports · Balance of Payments · Remittances · WTO · IMF
29
ExportsCurrent Affairs 2026
What was India's total exports figure for FY 2024-25, and which sector crossed an all-time high?
ANSWER
India's total exports (goods + services) reached a record USD 825.3 billion in FY25 (Economic Survey 2026). Services exports touched an all-time high of USD 387.6 billion, growing by 13.6% — driven by IT, software exports, financial services, and travel. India's share in global merchandise exports nearly doubled from 1% in 2005 to 1.8% in 2024, while services export share rose from 2% to 4.3%. Key merchandise exports: petroleum products, engineering goods, gems & jewellery, pharmaceuticals, chemicals.
🎯 Services exports $387.6B (new record) | Total exports $825.3B FY25
30
RemittancesCurrent Affairs 2026
India remains the world's largest recipient of remittances. What was the remittance inflow in FY25?
ANSWER
India remained the largest recipient of remittances globally in FY25, with inflows of USD 135.4 billion — approximately 3.5% of GDP (Economic Survey 2026). The top source countries for India's remittances: USA, UAE, UK, Saudi Arabia, Australia, Canada. Remittances finance India's current account deficit, support household consumption in rural areas, and are a stable source of foreign exchange (more stable than FDI or FPI). India's remittance inflows exceeded those of China and Mexico — the two closest competitors. Kerala, UP, Maharashtra, and Tamil Nadu are top recipient states.
31
Forex ReservesCurrent Affairs 2026
What was India's foreign exchange reserves figure in January 2026, and how many months of imports does it cover?
ANSWER
India's foreign exchange reserves rose to USD 701.4 billion in January 2026, providing import cover of about 11 months and covering 94% of external debt (Economic Survey 2026). Forex reserves comprise: Foreign Currency Assets (largest component), Gold, Special Drawing Rights (SDRs from IMF), and Reserve Position in IMF. India's forex reserves peaked at ~$704 billion in September 2021. Strong forex reserves: (1) Protect rupee from sharp depreciation; (2) Signal investor confidence; (3) Enable external debt service. The RBI manages forex reserves.
🎯 Forex reserves Jan 2026: $701.4B | Import cover: 11 months
32
FDI vs FPIStatic
What is the difference between FDI (Foreign Direct Investment) and FPI (Foreign Portfolio Investment)?
ANSWER
FDI (Foreign Direct Investment): Long-term investment by a foreign entity in a business in India with significant management control (generally 10%+ equity). Examples: Apple manufacturing in India, Amazon India, IKEA India. FPI (Foreign Portfolio Investment): Short-term investment in Indian stocks, bonds, and securities by foreign institutions — no management control. Also called Foreign Institutional Investment (FII). Key differences: FDI = long-term, stable, creates jobs; FPI = short-term, volatile ("hot money"), can exit quickly causing exchange rate instability. India's FDI policy is governed by FEMA and managed by DPIIT (Department for Promotion of Industry and Internal Trade).
33
Balance of PaymentsStatic
What is the Balance of Payments (BoP)? What is the difference between Current Account Deficit and Trade Deficit?
ANSWER
The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world in a year. It has two main accounts: Current Account (trade in goods, services, income, transfers) and Capital Account (FDI, FPI, loans, banking capital). Trade Deficit = Goods imports > Goods exports (merchandise trade only). Current Account Deficit (CAD) = Total current account outflows > inflows (goods + services + income + transfers). CAD is wider concept. India typically runs a CAD due to high oil and gold imports. Remittances and software services help narrow CAD.
34
WTOStatic + Current
What is the WTO, and what is India's key stance in WTO negotiations related to agriculture?
ANSWER
The WTO (World Trade Organisation) was established in 1995 (replaced GATT 1947), headquartered in Geneva. It sets rules for international trade, resolves disputes, and promotes free trade. Current Director-General: Ngozi Okonjo-Iweala (Nigeria, since 2021 — first woman and first African DG). India's key stance in WTO agriculture negotiations: (1) Food security concerns — India defends its right to maintain minimum support price (MSP) and public stockholding of food grains for the poor; (2) India argues that developing nations should be exempt from limits on food subsidies under the Peace Clause; (3) India supports Special Safeguard Mechanism to protect farmers from import surges.
35
IMF & World BankStatic
What is the difference between the IMF and the World Bank? What are their primary functions?
ANSWER
Both were established at Bretton Woods Conference (1944) and are UN specialised agencies headquartered in Washington D.C. IMF (International Monetary Fund): Provides short-term loans for countries facing balance of payments crises; ensures global monetary stability; issues Special Drawing Rights (SDRs). Current MD: Kristalina Georgieva (Bulgaria). World Bank: Provides long-term development loans for poverty reduction, infrastructure, and social programmes. Has 2 main arms: IBRD (for middle-income countries) + IDA (for poorest countries). Current President: Ajay Banga (India-origin American, since 2023). Key: IMF = monetary stability; World Bank = development financing.
36
GIFT CityCurrent Affairs
What is GIFT City and why is it significant for India's financial sector?
ANSWER
GIFT City (Gujarat International Finance Tec-City) in Gandhinagar, Gujarat is India's first operational International Financial Services Centre (IFSC). It is a special economic zone designed to provide financial services to non-residents and overseas entities. Regulated by IFSCA (International Financial Services Centres Authority). Significance: (1) Helps channel global capital into India; (2) Allows offshore banking, capital markets, insurance, fund management; (3) Competes with Singapore, Dubai, Hong Kong as regional finance hub; (4) Dollar-denominated transactions; (5) Special tax incentives. The Economic Survey 2026 highlights GIFT City as an emerging international financial hub.
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Part E — Agriculture, Government Schemes & Current Affairs
MSP · PM-KISAN · MGNREGS · Digital India · Key Indices
37
MSPStatic + Current
What is Minimum Support Price (MSP)? How is it determined, and who recommends it?
ANSWER
MSP (Minimum Support Price) is the price at which the government purchases crops from farmers — providing a price floor to protect farmers from market price crashes. The Commission for Agricultural Costs and Prices (CACP) recommends MSP for 23 major crops. MSP is based on: (1) Cost A2+FL (all paid-out costs + imputed value of family labour) — current standard; (2) Cost C2 (comprehensive cost including land rent) — farmers demand MSP based on C2 + 50% margin. Government announces MSP for Kharif crops (June/July) and Rabi crops (October/November). MSP is legally not guaranteed — it is administrative; legal backing is a key farmer demand.
38
PM-KISANScheme
What is PM-KISAN scheme? How much income support does it provide annually to farmers?
ANSWER
PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) was launched in December 2018. It provides ₹6,000 per year (in 3 equal instalments of ₹2,000 every 4 months) as income support to all land-holding farmer families across India. Implemented by Ministry of Agriculture & Farmers Welfare. Payment made directly to farmers' bank accounts through DBT (Direct Benefit Transfer). Benefits over 11 crore farmers. Budget allocation: ~₹60,000 crore annually. The scheme aims to supplement farm income and help meet input costs. Farmer must have their name in land records and have Aadhaar-linked bank account.
🎯 PM-KISAN = ₹6,000/year in 3 instalments | ~11 crore beneficiaries
39
MGNREGSStatic
What is MGNREGS, and what is its legal guarantee to rural workers?
ANSWER
MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) was enacted by the MGNREGA, 2005. It provides a legal guarantee of 100 days of unskilled wage employment per financial year to every rural household whose adult members volunteer for unskilled manual work. If work is not provided within 15 days of application, workers are entitled to an unemployment allowance. The scheme also mandates: at least 1/3 of workers must be women; minimum wage payment; works must be within 5 km of residence. MGNREGS is the world's largest public employment guarantee programme — provides income security during agricultural off-season and natural disasters.
40
Jan Dhan YojanaScheme
What is PM Jan Dhan Yojana (PMJDY), and how many accounts have been opened under it?
ANSWER
PMJDY (Pradhan Mantri Jan Dhan Yojana) was launched on 28 August 2014 — India's national financial inclusion mission to provide universal banking access. It offers: Zero-balance savings accounts, RuPay debit card, ₹1 lakh accident insurance, ₹30,000 life cover, overdraft of ₹10,000 (up from ₹5,000), access to micro-insurance and pension. Over 53 crore (530 million) PMJDY accounts have been opened by 2025, with ~56% women account holders. PMJDY accounts form the backbone of DBT (Direct Benefit Transfer) — linking welfare schemes directly to beneficiaries' bank accounts (JAM Trinity: Jan Dhan + Aadhaar + Mobile).
🎯 JAM Trinity: Jan Dhan + Aadhaar + Mobile = DBT backbone
41
PM Dhan DhanyaBudget 2025-26
What is PM Dhan-Dhaanya Krishi Yojana announced in Budget 2025-26?
ANSWER
The PM Dhan-Dhaanya Krishi Yojana was announced in Union Budget 2025-26 as an Agri Districts Programme. It will be developed in partnership with State governments covering 100 districts with: low productivity, moderate crop intensity, and below-average credit parameters. Expected to benefit 1.7 crore farmers. The programme aims to enhance agricultural productivity, crop diversification, post-harvest storage (at panchayat and block level), and irrigation through minor irrigation works. It is modelled on the Aspirational Districts Programme — focusing on lagging districts for targeted intervention.
42
MSMEStatic + Current
What is the revised definition of MSMEs as per the Atmanirbhar Bharat announcement in 2020?
ANSWER
The MSME definition was revised in 2020 under the Atmanirbhar Bharat package, using both Investment AND Turnover as criteria (previously only investment): Micro: Investment ≤ ₹1 crore AND Turnover ≤ ₹5 crore. Small: Investment ≤ ₹10 crore AND Turnover ≤ ₹50 crore. Medium: Investment ≤ ₹50 crore AND Turnover ≤ ₹250 crore. The manufacturing vs services distinction was removed. MSMEs contribute ~30% of GDP, ~45% of exports, and employ ~11 crore people. The Emergency Credit Line Guarantee Scheme (ECLGS) was launched to provide collateral-free loans to MSMEs during COVID.
43
Human DevelopmentIndex
What is the Human Development Index (HDI), and what are its three dimensions? What is India's current HDI rank?
ANSWER
The HDI (Human Development Index) was created by Pakistani economist Mahbub ul Haq with Amartya Sen's conceptual framework and is published by UNDP (Human Development Report). Three dimensions: (1) Long & Healthy Life — measured by Life Expectancy at Birth; (2) Knowledge — measured by Mean Years of Schooling + Expected Years of Schooling; (3) Decent Standard of Living — measured by GNI per capita (PPP). India's HDI rank: 134th out of 193 countries (HDR 2023/24) — in the "Medium Human Development" category. India's HDI value: 0.644. Neighbours: Sri Lanka (78th) ranks much higher.
44
Ease of Doing BusinessIndex
India has significantly improved its Ease of Doing Business (EoDB) ranking. What major reforms contributed to this improvement?
ANSWER
India jumped from rank 142 (2014) to 63rd in World Bank EoDB Index 2020 (last edition before World Bank discontinued it). Key reforms: (1) IBC 2016 — improved "Resolving Insolvency" (100+ rank jump); (2) GST — unified tax system; (3) E-courts, faceless assessment; (4) Reduced compliances via NIC-20 process; (5) RERA — Real Estate Regulatory Authority; (6) Start-up India (January 2016) — simplified registration; (7) Labour codes consolidating 29 laws into 4; (8) Commercial courts for faster dispute resolution; (9) Single window clearances. India's FDI inflows grew from $36B (2014) to $71B (2023) reflecting improved business environment.
45
Make in IndiaScheme
What is the Make in India initiative, and what target has been set for India's manufacturing sector's share of GDP?
ANSWER
Make in India was launched in September 2014 with the objective of transforming India into a global manufacturing hub. The initiative focuses on 27 sectors (expanded from original 25). Target: Increase manufacturing's share of GDP from ~16% to 25% by 2025 (this goal has not been met — manufacturing remains ~17–18% of GDP). Create 100 million additional jobs in manufacturing. The initiative is supported by: PLI Schemes (sector-specific production incentives), industrial corridors (Delhi-Mumbai, Chennai-Bengaluru), SEZs, and improved infrastructure under PM Gati Shakti.
46
Social SecurityScheme
What are the three micro-insurance/pension social security schemes launched on 9 May 2015 for the unorganised sector?
ANSWER
Three schemes launched simultaneously on 9 May 2015: (1) PMJJBY (PM Jeevan Jyoti Bima Yojana): Life insurance — ₹2 lakh cover for death; annual premium ₹436; for ages 18–50; linked to bank account. (2) PMSBY (PM Suraksha Bima Yojana): Accident insurance — ₹2 lakh for accidental death/full disability; ₹1 lakh partial disability; annual premium ₹20; for ages 18–70. (3) APY (Atal Pension Yojana): Pension scheme for unorganised sector workers; guaranteed pension ₹1,000–₹5,000/month after age 60; government co-contributes for eligible subscribers (those not covered by any other social security scheme).
47
Global Hunger IndexIndex
India's performance on the Global Hunger Index has been controversial. Who publishes it, and why has India disputed its findings?
ANSWER
The Global Hunger Index (GHI) is published jointly by Welthungerhilfe (Germany) and Concern Worldwide (Ireland). India has consistently ranked poorly (105–111th range among 121 countries). India's government has disputed the GHI, stating: (1) The methodology is flawed — one indicator (proportion of undernourished) uses a sample of only 3,000 people; (2) Child stunting and wasting data used is from NFHS surveys which predate the current year; (3) The index doesn't adequately capture India's food security improvements through PMGKAY (free ration to 80 crore people). India argues the GHI significantly underestimates its food security achievements.
48
SemiconductorCurrent Affairs 2026
What is India's Semiconductor Mission, and which facility has been announced in Gujarat?
ANSWER
The India Semiconductor Mission (ISM) was launched in December 2021 with a budget of ₹76,000 crore to build a semiconductor and display manufacturing ecosystem in India. India approved its first semiconductor fabrication (fab) plants: (1) Tata Electronics (with PSMC, Taiwan) — fab in Dholera, Gujarat; (2) CG Power (with Renesas, Japan) — ATMP (Assembly, Testing, Marking, Packaging) plant in Sanand, Gujarat; (3) Micron Technology (USA) — semiconductor packaging plant in Sanand, Gujarat (first US chipmaker in India). These plants are expected to be operational by 2025-26. The Economic Survey 2026 highlights PLI + semiconductor mission as drivers of electronics manufacturing.
🎯 First semiconductor fab: Tata-PSMC at Dholera, Gujarat
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Disciplined SwadeshiEconomic Survey 2026
What is "Disciplined Swadeshi" as introduced in Economic Survey 2025-26?
ANSWER
"Disciplined Swadeshi" is a three-tier strategic framework introduced in the Economic Survey 2025-26 to address India's strategic vulnerabilities while integrating into global value chains: (1) Addressing strategic vulnerabilities — building self-reliance in critical sectors (semiconductors, defence, pharmaceuticals APIs) to reduce import dependence; (2) Building high-payoff capabilities — investing in sectors where India has competitive advantage (IT, pharma, services); (3) Strengthening advanced manufacturing while embedding India deeper in global value chains (GVCs). It differs from protectionism — it is not "close the door" but "build domestic strength while engaging globally."
50
India's Rank — World EconomyCurrent Affairs 2026
What is India's current rank as the world's largest economy by GDP (nominal), and when is India projected to overtake Japan and Germany?
ANSWER
India is currently the 5th largest economy in the world by nominal GDP (as of 2025), having overtaken the UK in 2022. Current top 5: USA ($29T) → China ($18T) → Germany ($4.5T) → Japan ($4.2T) → India (~$4T). India is projected to: Overtake Japan and Germany by 2027–2028 (according to IMF and S&P Global forecasts), becoming the 3rd largest economy. India aims to become a $5 trillion economy by FY2026-27 (delayed from original 2024-25 target). By 2047 (Viksit Bharat), India aims to be in the top 3 economies globally with high-income status.
🎯 India = 5th largest economy | Target: 3rd by 2027-28 | $5T by FY2026-27
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