UPSC IAS Archives

1. Consider the investments in the following assets: 1. Brand recognition

Consider the investments in the following assets:
1. Brand recognition
2. Inventory
3. Intellectual property
4. Mailing list of clients
How many of the above are considered intangible investments?

Only one

Only two

Only three

All four

This question was previously asked in

UPSC IAS – 2023

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Investments can be classified as tangible or intangible. Tangible investments are in physical assets that have substance and can be touched, such as land, buildings, machinery, and inventory. Intangible investments are in non-physical assets that derive their value from intellectual or legal rights, brand reputation, relationships, or data.

1. **Brand recognition:** This is the level of consumer awareness and identification of a particular brand. It is a non-physical asset that contributes to a company’s value through reputation and customer loyalty. It is an **intangible** investment.
2. **Inventory:** Inventory consists of raw materials, work-in-progress, and finished goods held by a company. These are physical assets. It is a **tangible** investment.
3. **Intellectual property:** This includes legal rights like patents, copyrights, trademarks, trade secrets, etc. These are non-physical assets that grant exclusive rights to the owner. It is an **intangible** investment.
4. **Mailing list of clients:** This represents valuable data about customers and potential customers. While the list might exist physically or digitally, its value lies in the information and the relationship capital it represents, which is non-physical. It is considered an **intangible** investment (often part of customer-related intangible assets).

Out of the four options, Brand recognition (1), Intellectual property (3), and Mailing list of clients (4) are considered intangible investments. Inventory (2) is a tangible investment. Therefore, there are three intangible investments listed.

– Intangible investments are in non-physical assets.
– Tangible investments are in physical assets.
– Brand recognition, intellectual property, and client lists are intangible assets.
– Inventory is a tangible asset.

Intangible assets are increasingly important drivers of value for modern businesses. Accounting standards provide guidelines for recognizing and valuing certain intangible assets, such as intellectual property.

2. Consider the following statements: The Government of India provides

Consider the following statements:

The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds.
Niger is cultivated as a Kharif crop.
Some tribal people in India use niger seed oil for cooking.

How many of the above statements are correct?

Only one

Only two

All three

None

This question was previously asked in

UPSC IAS – 2023

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1. The Government of India provides Minimum Support Price for niger (Guizotia abyssinica) seeds. This statement is correct. Niger seed is one of the oilseeds for which the Minimum Support Price (MSP) is announced by the Government of India for both Kharif and Rabi seasons based on the recommendations of the Commission for Agricultural Costs and Prices (CACP).

2. Niger is cultivated as a Kharif crop. This statement is correct. Niger is predominantly a Kharif crop in India, sown with the onset of the monsoon (June-July) and harvested from September to November. It is primarily grown in states like Odisha, Chhattisgarh, Madhya Pradesh, Maharashtra, Andhra Pradesh, and Karnataka.

3. Some tribal people in India use niger seed oil for cooking. This statement is correct. Niger seed oil is edible and is traditionally used for cooking, especially by tribal populations and in rural areas where it is cultivated, due to its availability and nutritional properties. It is also used for other purposes like lighting and soap making.

All three statements are factually correct.

– Niger seed is covered under the Government of India’s MSP scheme.
– Niger is primarily grown during the Kharif season in India.
– Niger seed oil is used for cooking, including by some tribal communities.

Niger (also known as ramtil) is an important minor oilseed crop, particularly suited for cultivation on marginal lands and under rainfed conditions. It provides livelihood to farmers in hilly and tribal areas.

3. Which one of the following best describes the concept of ‘Small Farmer

Which one of the following best describes the concept of ‘Small Farmer Large Field’?

Resettlement of a large number of people, uprooted from their countries due to war, by giving them a large cultivable land which they cultivate collectively and share the produce

Many marginal farmers in an area organize themselves into groups and synchronize agricultural operations

Many marginal farmers in an area together make a contract with a corporate body and surrender their land to the corporate body for a fixed term for which the corporate body makes a payment of agreed amount to the farmers

A company extends loans, technical knowledge and material inputs to a number of small farmers in an area so that they produce the agricultural commodity required by the company for its manufacturing process and commercial production

This question was previously asked in

UPSC IAS – 2023

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The concept of ‘Small Farmer Large Field’ (SFLF) refers to a model where small and marginal farmers, despite owning small, fragmented landholdings, come together and collectively manage or synchronize their agricultural operations to achieve the benefits of scale that would otherwise be available only to large farms. This collaboration can involve joint planning, bulk purchasing of inputs, collective use of machinery, synchronized planting and harvesting, and collective marketing of produce. This effectively creates a ‘large field’ effect in terms of operational efficiency, input costs, and market access, benefiting the individual small farmers.

Option A describes collective farming, possibly in a resettlement context, which isn’t the specific focus of the SFLF concept typically discussed in the context of existing marginal farmers.
Option C describes corporate farming or contract farming where farmers might lease out or surrender their land to a company, shifting control away from the farmers; SFLF aims at farmers retaining control and benefiting from collective action.
Option D describes contract farming where a company provides inputs and buys output, but it doesn’t necessarily involve the farmers pooling or synchronizing operations across their fields to create a large-scale operational unit.

Option B, where many marginal farmers organize into groups and synchronize operations, best captures the essence of SFLF, enabling them to overcome the limitations of small land size through collective action and economies of scale in farming practices.

– ‘Small Farmer Large Field’ is a model for small and marginal farmers.
– It involves farmers organizing into groups and synchronizing operations.
– The goal is to achieve economies of scale similar to large farms while retaining ownership/control.

The SFLF concept is often promoted as a way to improve productivity, reduce costs, and enhance marketability for small farmers in countries where land fragmentation is a significant challenge. Various models exist for implementing SFLF, ranging from simple coordination of activities to more formal farmer producer organizations (FPOs) that manage collective operations and marketing.

4. Consider the following markets: 1. Government Bond Market 2. Call Mone

Consider the following markets:
1. Government Bond Market
2. Call Money Market
3. Treasury Bill Market
4. Stock Market
How many of the above are included in capital markets?

Only one

Only two

Only three

All four

This question was previously asked in

UPSC IAS – 2023

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Financial markets are broadly categorized into money markets and capital markets. Money markets deal with short-term instruments, typically with a maturity of one year or less, used for managing short-term liquidity needs. Capital markets deal with long-term instruments, including equity (shares) and debt with maturities greater than one year, used for long-term financing and investment.

1. **Government Bond Market:** Government bonds (like G-Secs) are typically issued with maturities ranging from 1 year to 30 years or even more. These are long-term debt instruments, making the government bond market a part of the **capital market**.
2. **Call Money Market:** This is a market where banks lend to and borrow from each other for very short periods, typically overnight or up to 14 days, to meet their reserve requirements. This is a part of the **money market**.
3. **Treasury Bill Market:** Treasury Bills (T-Bills) are short-term debt instruments issued by the government with maturities of less than one year (currently 91, 182, and 364 days in India). The T-Bill market is a part of the **money market**.
4. **Stock Market:** The stock market deals with equity shares, which represent ownership in a company. Shares are perpetual instruments and represent long-term capital for the company. The stock market is a part of the **capital market**.

Based on this classification, the Government Bond Market (1) and the Stock Market (4) are included in capital markets. This is a total of two markets.

– Capital markets deal with long-term financial instruments (equity and debt > 1 year).
– Money markets deal with short-term financial instruments (debt ≤ 1 year).
– Government Bonds and Stocks are long-term instruments traded in capital markets.
– Call Money and Treasury Bills are short-term instruments traded in money markets.

The capital market facilitates the mobilization of savings for long-term investments by corporations and governments. The money market provides liquidity to the financial system and facilitates the implementation of monetary policy.

5. Which one of the following activities of the Reserve Bank of India is

Which one of the following activities of the Reserve Bank of India is considered to be part of ‘sterilization’?

Conducting 'Open Market Operations'

Oversight of settlement and payment systems

Debt and cash management for the Central and State Governments

Regulating the functions of Non-banking Financial Institutions

This question was previously asked in

UPSC IAS – 2023

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Sterilization, in the context of central banking, refers to actions taken by the central bank to offset the impact of its interventions in the foreign exchange market on the domestic money supply. When a central bank buys foreign currency to prevent its appreciation (or sells to prevent depreciation), it either injects domestic currency (when buying foreign currency) or withdraws it (when selling foreign currency) from the banking system, thereby affecting the domestic money supply. To sterilize this effect, the central bank conducts offsetting operations in the domestic money market. The most common tool used for sterilization is Open Market Operations (OMO). For example, if the RBI buys dollars, it pays rupees, increasing liquidity. To sterilize this, RBI sells government securities in the open market, absorbing rupees and withdrawing the excess liquidity.

– Sterilization is a monetary policy tool used by central banks.
– Its purpose is to neutralize the impact of foreign exchange interventions on domestic money supply.
– The primary tool used for sterilization is Open Market Operations (buying or selling government securities).

Other options are not related to sterilization: Oversight of settlement and payment systems is a regulatory function. Debt and cash management for the government is agency work performed by the RBI, not monetary policy per se. Regulating NBFCs is part of the RBI’s supervisory role.

6. Consider the following statements: Statement-I: Carbon markets are l

Consider the following statements:

Statement-I: Carbon markets are likely to be one of the most widespread tools in the fight against climate change.
Statement-II: Carbon markets transfer resources from the private sector to the State.

Which one of the following is correct in respect of the above statements?

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1

Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1

Statement-I is correct but Statement-II is incorrect

Statement-I is incorrect Statement-II is correct

This question was previously asked in

UPSC IAS – 2023

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Statement-I suggests that carbon markets are likely to be one of the most widespread tools in the fight against climate change. This statement is correct. Carbon pricing mechanisms, including cap-and-trade systems and carbon taxes (often discussed alongside markets), are increasingly being adopted or considered by countries and regions globally as a market-based approach to incentivize emission reductions efficiently. Major economies like the EU, China, and parts of the US and Canada have implemented or are developing carbon markets. International initiatives also promote carbon pricing. Given the global push for decarbonization, carbon markets are indeed becoming a widespread tool.

Statement-II claims that carbon markets transfer resources from the private sector to the State. This statement is a partial truth and can be misleading as a general description of carbon markets. While mechanisms like auctioning of emission allowances in a cap-and-trade system or collecting carbon taxes *do* transfer resources from polluting entities (often private sector) to the government (State), a significant part of the activity in carbon markets involves trading allowances or credits *between* private sector entities. For example, in a cap-and-trade system, a company that has reduced emissions below its allowance can sell its surplus allowances to a company that needs more allowances. This is a transfer of resources within the private sector. Similarly, buying carbon offsets from a project developed by a private entity involves private-to-private transfer. Therefore, stating that carbon markets *transfer resources from the private sector to the State* as a general characteristic is not accurate as it omits the significant private-to-private resource transfers. Thus, Statement-II is incorrect as a comprehensive description.

Since Statement-I is correct and Statement-II is incorrect, option C is the correct answer. Statement-II cannot be the explanation for Statement-I because the mechanism of resource transfer (even if it were accurately described) does not explain *why* carbon markets are widespread tools; they are widespread because they are seen as an economically efficient way to achieve emission reduction targets.

– Statement-I is correct; carbon markets are becoming a prominent global tool for climate action.
– Statement-II is incorrect as carbon markets involve significant resource transfers within the private sector, not solely from the private sector to the State.
– Statement-I being correct and Statement-II being incorrect leads to option C.

Carbon markets aim to reduce greenhouse gas emissions by putting a price on carbon. This price can be established through setting a cap on emissions and allowing entities to trade allowances (cap-and-trade) or by directly taxing emissions (carbon tax). The revenue generated from auctions or taxes can go to the government, but the trading component involves value flows based on market dynamics between participating entities.

7. Consider the following statements : Statement-I: In the post-pandemi

Consider the following statements :

Statement-I: In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes.
Statement-II: Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means.

Which one of the following is correct in respect of the above statements?

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1

Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1

Statement-I is correct but Statement-II is incorrect

Statement-I is incorrect Statement-II is correct

This question was previously asked in

UPSC IAS – 2023

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Statement-I asserts that many Central Banks worldwide had carried out interest rate hikes in the post-pandemic recent past. This is correct. Following the initial phase of the COVID-19 pandemic which saw accommodative monetary policies, rising inflation globally prompted major central banks (like the US Federal Reserve, European Central Bank, Reserve Bank of India, etc.) to significantly increase policy interest rates starting from late 2021/early 2022 to curb inflationary pressures.

Statement-II states that Central Banks generally assume they have the ability to counteract rising consumer prices via monetary policy means. This is also correct. Controlling inflation and maintaining price stability is one of the primary mandates of most central banks. Monetary policy tools, such as adjusting interest rates, managing liquidity through open market operations, and setting reserve requirements, are designed specifically to influence aggregate demand and inflation. Central banks operate based on the assumption that these tools can effectively manage inflation, although the degree and speed of impact can vary.

Statement-II provides the fundamental reason why central banks resort to actions like interest rate hikes (as mentioned in Statement-I) when faced with rising consumer prices. They raise rates because they believe this monetary policy tool can help bring down inflation. Therefore, Statement-II is the correct explanation for Statement-I.

– Statement-I correctly describes the global trend of central banks raising interest rates post-pandemic.
– Statement-II correctly describes the core belief of central banks that monetary policy can be used to combat inflation.
– Statement-II explains the rationale behind the action described in Statement-I (raising rates to fight rising prices).

Post-pandemic inflation was driven by a complex mix of factors including supply chain disruptions, energy price shocks, and strong consumer demand supported by fiscal stimulus. Central banks primarily responded by tightening monetary policy, with interest rate hikes being the most prominent tool, based on the Phillips curve relationship (though debated) and the understanding that higher borrowing costs reduce economic activity and inflationary pressure.

8. Consider the following statements: Statement-I: Interest income from

Consider the following statements:

Statement-I: Interest income from the deposits in Infrastructure Investment Trusts (InvITs) distributed to their investors is exempted from tax, but the dividend is taxable.
Statement-II: InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’.

Which one of the following is correct in respect of the above statements?

Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-1

Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-1

Statement-I is correct but Statement-II is incorrect

Statement-I is incorrect Statement-II is correct

This question was previously asked in

UPSC IAS – 2023

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Statement-I claims that interest income from InvIT deposits distributed to investors is exempted from tax, but dividend is taxable. This is incorrect as per current tax laws in India applicable to InvITs/REITs. Distributions from InvITs are taxed in the hands of the unit holders based on the nature of income received by the SPV/Trust. Interest income distributed by the InvIT is generally taxable for the unit holder. Dividend income distributed by the InvIT out of taxable income of the SPV is also taxable for the unit holder. Dividend distributed out of exempt income of the SPV is exempt. Therefore, the statement that interest income is exempt is incorrect.

Statement-II states that InvITs are recognized as borrowers under the ‘Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’ (SARFAESI Act, 2002). InvITs and their underlying Special Purpose Vehicles (SPVs) often borrow funds to finance their infrastructure projects. When they borrow from banks or financial institutions against their assets, they become borrowers. If they default, the lenders can enforce security interests under the SARFAESI Act, which applies to loans secured by immovable assets. Thus, InvITs (or their SPVs through which assets are held) are considered borrowers under the purview of the SARFAESI Act. This statement is correct.

– Statement-I is incorrect regarding the tax exemption of interest income distributed by InvITs; interest is typically taxable.
– Statement-II is correct as InvITs/SPVs borrowing funds can fall under the purview of the SARFAESI Act as borrowers.
– Since Statement-I is incorrect and Statement-II is correct, option D is the correct choice.

The tax treatment of InvIT distributions has evolved. As of recent provisions (post-Budget 2020), distributions are taxed at the investor level based on their underlying character (interest, dividend, or capital repayment). Interest distributions are taxable at applicable rates. Dividend distributions are taxable if they come from the SPV’s taxable income, otherwise, they are exempt. Capital repayments are generally exempt. The SARFAESI Act empowers banks and financial institutions to recover non-performing loans without court intervention by dealing with secured assets, and entities borrowing against such assets, including those held by InvITs or their SPVs, fall under its definition of a borrower.

9. With reference to India’s projects on connectivity, consider the follo

With reference to India’s projects on connectivity, consider the following statements :

1. East-West Corridor under Golden Quadrilateral Project connects Dibrugarh and Surat.
2. Trilateral Highway connects Moreh in Manipur and Chiang Mai in Thailand via Myanmar.
3. Bangladesh-China-India-Myanmar Economic Corridor connects Varanasi in Uttar Pradesh with Kunming in China.

How many of the statements given above are correct?

Only one

Only two

All three

None

This question was previously asked in

UPSC IAS – 2023

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Statement 1 is incorrect: The East-West Corridor under the National Highways Development Project (NHDP), not the Golden Quadrilateral, connects Silchar in Assam and Porbandar in Gujarat. Dibrugarh and Surat are not the endpoints.
Statement 2 is incorrect: The India–Myanmar–Thailand Trilateral Highway connects Moreh in Manipur, India, to Mae Sot in Thailand via Myanmar. While it facilitates travel further into Thailand, the primary defined endpoint on the Thai side within the project is Mae Sot, not Chiang Mai.
Statement 3 is incorrect: The Bangladesh-China-India-Myanmar (BCIM) Economic Corridor is conceptualized to connect Kolkata in India to Kunming in China, passing through Bangladesh (Dhaka) and Myanmar (Mandalay). It does not connect Varanasi.
As all three statements contain factual inaccuracies regarding the endpoints of the mentioned connectivity projects, none of the statements are correct.

– East-West Corridor connects Silchar and Porbandar.
– Trilateral Highway connects Moreh and Mae Sot.
– BCIM Economic Corridor links Kolkata and Kunming.

The Golden Quadrilateral is a separate project connecting the four major metro cities (Delhi, Mumbai, Chennai, Kolkata). The North-South and East-West Corridors are part of NHDP Phase II. The Trilateral Highway aims to boost trade, tourism, and connectivity between the three countries. The BCIM corridor is a proposed economic corridor aimed at enhancing economic cooperation.

10. Consider the following statements: 1. Amarkantak Hills are at conflu

Consider the following statements:

1. Amarkantak Hills are at confluence of Vindhya and the Sahyadri Ranges.
2. Biligirirangan Hills constitute the easternmost part of Satpura Range.
3. Seshachalam Hills constitute the southernmost part of Western Ghats.

How many of the statements given above are correct?

Only one

Only two

All three

None

This question was previously asked in

UPSC IAS – 2023

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Statement 1 is incorrect: Amarkantak Hills (part of the Maikal range) are located at the border of Madhya Pradesh and Chhattisgarh. They are associated with the eastern end of the Satpura Range system and the southern edge of the Vindhyan scarp, but not at the confluence of the Vindhya and Sahyadri (Western Ghats) Ranges, which are geographically distant.
Statement 2 is incorrect: Biligirirangan Hills (BR Hills) are located in southern Karnataka and connect the Western and Eastern Ghats, serving as an ecological corridor. They are far south of the Satpura Range.
Statement 3 is incorrect: Seshachalam Hills are a part of the Eastern Ghats in Andhra Pradesh. The southernmost part of the Western Ghats includes ranges like the Cardamom Hills and Agasthyamalai Hills in Kerala and Tamil Nadu.
Since all three statements are factually incorrect regarding the geographical locations and associations of the mentioned hill ranges, none of the statements are correct.

– Amarkantak is linked to Satpura and Vindhya systems but not Sahyadri.
– BR Hills connect Eastern and Western Ghats in South India.
– Seshachalam Hills belong to the Eastern Ghats.

Amarkantak is the source of the Narmada and Son rivers. BR Hills are known for their biodiversity and are a Tiger Reserve. Seshachalam Hills are home to the famous Tirupati Venkateswara Temple.