Economic Development

161. With reference to solar power production in India, consider the follow

With reference to solar power production in India, consider the following statements :

  • India is the third largest in the world in the manufacture of silicon wafers used in photovoltaic units.
  • The solar power tariffs are determined by the Solar Energy Corporation of India.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option4″]

This question was previously asked in
UPSC IAS – 2018
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Let’s examine the two statements regarding solar power production in India.
Statement 1 is incorrect. India is not the third largest in the world in the manufacture of silicon wafers used in photovoltaic units. The global market for silicon wafers and solar cells is dominated by countries like China, Taiwan, and Malaysia. While India has been increasing its domestic manufacturing capacity through policies like Make in India and Atmanirbhar Bharat, it heavily relies on imports for wafers and cells.
Statement 2 is incorrect. While the Solar Energy Corporation of India (SECI) is a major implementing agency for renewable energy schemes and conducts auctions for solar power projects, resulting in tariff discovery through competitive bidding, it is not the sole authority determining all solar power tariffs in India. Tariffs for state-level projects are determined by state implementing agencies, often through bidding, and regulatory commissions also play a role in approving tariffs or methodologies. So, SECI determines tariffs for the projects it auctions, but not *the* solar power tariffs for the entire country.
India has made significant progress in solar power deployment and is among the top countries in installed solar capacity. However, the manufacturing ecosystem, especially for critical components like wafers and cells, is still developing, with a significant reliance on imports. Tariff determination is a multi-faceted process involving central and state agencies, competitive bidding, and regulatory oversight.

162. Consider the following statements : 1. The Reserve Bank of India man

Consider the following statements :

  • 1. The Reserve Bank of India manages and services Government of India Securities but not any State Government Securities.
  • 2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
  • 3. Treasury bills offer are issued at a discount from the par value.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 and 2 only” option2=”3 only” option3=”2 and 3 only” option4=”1, 2 and 3″ correct=”option3″]

This question was previously asked in
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The correct answer is C) 2 and 3 only.
This question pertains to the management of government securities and the characteristics of Treasury Bills in India.
1. The Reserve Bank of India (RBI) serves as the banker and debt manager for *both* the Central Government and the State Governments. It manages and services both Government of India Securities (G-Secs) and State Government Securities (State Development Loans – SDLs). Statement 1 is incorrect.
2. Treasury Bills (T-Bills) are short-term money market instruments. In India, T-Bills are issued *only* by the Central Government to meet its short-term funding requirements. State Governments do not issue T-Bills; they raise market borrowings through SDLs. Statement 2 is correct.
3. Treasury Bills are zero-coupon securities, meaning they do not pay interest. They are issued at a discount to their face value (par value) and redeemed at the par value on maturity. The return to the investor is the difference between the maturity value and the issue price (the discount). Statement 3 is correct.
Therefore, statements 2 and 3 are correct.

163. Despite being a high saving economy, capital formation may not result

Despite being a high saving economy, capital formation may not result in significant increase in output due to

[amp_mcq option1=”weak administrative machinery” option2=”illiteracy” option3=”high population density” option4=”high capital-output ratio” correct=”option4″]

This question was previously asked in
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The correct answer is D) high capital-output ratio.
The capital-output ratio (COR) is an economic metric that describes the relationship between the amount of capital invested in an economy and the amount of output it produces. A high COR indicates that a large amount of capital is required to produce a given increase in output.
In a high-saving economy, a significant portion of national income is saved and potentially converted into investment (capital formation). However, if the economy suffers from a high capital-output ratio, the efficiency of converting this capital investment into actual output growth is low. This can happen due to various reasons like inefficient investment allocation, long gestation periods of projects, poor infrastructure, technological backwardness, or structural rigidities, all of which make each unit of capital less productive in generating output. Therefore, high savings and capital formation might not translate into a proportionally high increase in output if the capital-output ratio is high.

164. Increase in absolute and per capita real GNP do not connote a higher l

Increase in absolute and per capita real GNP do not connote a higher level of economic development, if

[amp_mcq option1=”industrial output fails to keep pace with agricultural output.” option2=”agricultural output fails to keep pace with industrial output.” option3=”poverty and unemployment increase.” option4=”imports grow faster than exports.” correct=”option3″]

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The correct answer is C.
Economic development is a broader concept than economic growth (measured by metrics like GNP/GDP). While growth in real per capita GNP indicates an increase in the average income/output per person, it does not guarantee improved living standards or overall welfare for all. If poverty and unemployment increase alongside GNP growth, it suggests that the benefits of growth are concentrated among certain segments of the population, inequality is rising, and structural issues prevent job creation. This scenario indicates that economic growth is not leading to inclusive or equitable development.
Economic development typically involves not just quantitative growth but also qualitative improvements in areas such as health, education, income distribution, poverty reduction, and environmental sustainability. High GNP growth coupled with increasing poverty and unemployment points to a failure in translating economic expansion into broad-based improvements in human well-being.

165. If a commodity is provided free to the public by the Government, then

If a commodity is provided free to the public by the Government, then

[amp_mcq option1=”the opportunity cost is zero.” option2=”the opportunity cost is ignored.” option3=”the opportunity cost is transferred from the consumers of the product to the tax-paying public.” option4=”the opportunity cost is transferred from the consumers of the product to the Government.” correct=”option3″]

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The correct answer is C.
Opportunity cost is the value of the next-best alternative use of resources. When the government provides a commodity for free, the resources used to produce or acquire that commodity are not free from the perspective of society or the economy. Those resources (labor, materials, capital) could have been used to produce other goods or services. The cost of these foregone alternatives is the opportunity cost. Since the consumer doesn’t pay for the commodity, the burden of this opportunity cost (funding the production/acquisition) is shifted to the general public, primarily through taxes. Taxpayers pay for the resources used by the government, effectively bearing the opportunity cost that consumers would have borne through direct payment.
Option A is incorrect because resources have alternative uses, hence the opportunity cost is not zero. Option B is incorrect because while consumers might ignore the opportunity cost personally, it exists from society’s perspective. Option D is partially correct in that the cost is borne by the government budget, but it is more precise to say the cost is transferred *from* the consumers *to* the tax-paying public, who fund the government budget.

166. Which one of the following statements correctly describes the meaning

Which one of the following statements correctly describes the meaning of legal tender money ?

[amp_mcq option1=”The money which is tendered in courts of law to defray the fee of legal cases” option2=”The money which a creditor is under compulsion to accept in settlement of his claims” option3=”The bank money in the form of cheques, drafts, bills of exchange, etc.” option4=”The metallic money in circulation in a country” correct=”option2″]

This question was previously asked in
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The correct answer is B.
Legal tender money is currency (coins and banknotes) that is legally valid for the fulfillment of a financial obligation. A creditor is legally compelled to accept legal tender in settlement of a debt. The refusal to accept legal tender money in payment of a debt discharges the debtor from the obligation to pay that amount.
Option A is incorrect as legal tender is not specifically for court fees, though it can be used for them. Option C is incorrect as cheques, drafts, and bills of exchange are types of “bank money” or “credit money” and their acceptance is voluntary, not compulsory legal tender. Option D is too narrow; while metallic money can be legal tender, the definition applies to any form of currency that the law designates as such, including banknotes, and the key characteristic is compulsory acceptance by creditors.

167. Consider the following statements : 1. Capital Adequacy Ratio (CAR)

Consider the following statements :

  • 1. Capital Adequacy Ratio (CAR) is the amount that banks have to maintain in the form of their own funds to offset any loss that banks incur if the account-holders fail to repay dues.
  • 2. CAR is decided by each individual bank.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option1″]

This question was previously asked in
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The correct option is A because statement 1 provides a largely accurate description of Capital Adequacy Ratio (CAR), while statement 2 is incorrect.
CAR is a crucial prudential regulation for banks, ensuring they have sufficient capital to absorb potential losses from risks like loan defaults (credit risk). This minimum ratio is set by the banking regulator, not individual banks.
Statement 1 correctly describes CAR as the ratio of a bank’s capital to its risk-weighted assets, maintained to absorb potential losses, including those from account holders failing to repay dues (Non-Performing Assets or NPAs). It ensures the bank remains solvent. Statement 2 is incorrect. The minimum Capital Adequacy Ratio that banks must maintain is mandated by the central bank (like the RBI in India) based on guidelines such as the Basel norms. Individual banks may choose to maintain a higher ratio for safety, but the minimum is externally determined by the regulator.

168. Which one of the following links all the ATMs in India ?

Which one of the following links all the ATMs in India ?

[amp_mcq option1=”Indian Banks’ Association” option2=”National Securities Depository Limited” option3=”National Payments Corporation of India” option4=”Reserve Bank of India” correct=”option3″]

This question was previously asked in
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The correct option is C. The National Payments Corporation of India (NPCI) links all the ATMs in India through its National Financial Switch (NFS).
NPCI is the umbrella organization for retail payments and settlement systems in India, responsible for operating various critical payment infrastructures including the network that connects ATMs.
The National Financial Switch (NFS) is the largest network of shared automated teller machines (ATMs) in India, operated by the National Payments Corporation of India (NPCI). It connects the ATMs of various banks, enabling interoperability for cash withdrawal and other services. The other options are incorrect: Indian Banks’ Association is an industry body; National Securities Depository Limited is related to the stock market; and RBI is the regulator but does not operate the physical network connecting ATMs.

169. Consider the following statements : 1. The quantity of imported edib

Consider the following statements :

  • 1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
  • 2. The Government does not impose any customs duty on all the imported edible oils as a special case.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option1″]

This question was previously asked in
UPSC IAS – 2018
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The correct option is A because statement 1 is generally true regarding India’s edible oil market over the last five years (prior to the question being framed), while statement 2 is incorrect.
India is one of the world’s largest importers of edible oils, significantly relying on imports to meet domestic demand. The government levies customs duties on imported edible oils, although the rates may vary over time based on policy objectives like protecting domestic producers or controlling inflation.
Statement 1 is accurate. India’s domestic production of edible oils has consistently fallen short of consumption, leading to substantial imports of palm oil, soybean oil, and sunflower oil. The volume of imports has often exceeded domestic production. Statement 2 is incorrect; the Indian government imposes customs duties (basic customs duty, agriculture infrastructure and development cess, etc.) on imported edible oils, though rates are adjusted periodically. There is no blanket policy of zero customs duty on all imported edible oils.

170. Consider the following statements: 1. The Fiscal Responsibility and

Consider the following statements:

  • 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023; comprising 40% for the Central Government and 20% for the State Governments.
  • 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments.
  • 3. As per the Constitution of India, it is mandatory for a State to take the Central Government’s consent for raising any loan if the former owes any outstanding liabilities to the latter.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 and 3 only” option3=”1 and 3 only” option4=”1, 2 and 3″ correct=”option3″]

This question was previously asked in
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Statement 1 is correct. The Fiscal Responsibility and Budget Management (FRBM) Review Committee headed by N.K. Singh recommended a debt-to-GDP ratio of 60% for the general government (Centre + States) by 2023, with a break-up of 40% for the Central Government and 20% for the State Governments.
Statement 2 is incorrect. As per government data around the time this question would be relevant (e.g., pre-pandemic years), the Central Government’s liabilities were significantly higher than 21% of GDP and also higher than the State Governments’ liabilities. State Governments’ total outstanding liabilities were typically around 25-30% of GDP, while the Centre’s liabilities were closer to 50-55% of GDP. The statement provides figures that are roughly the opposite of the actual situation.
Statement 3 is correct. Article 293(3) of the Constitution of India states that a State may not, without the consent of the Government of India, raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India. This makes the Centre’s consent mandatory for states indebted to the Centre before raising further loans.
– The N.K. Singh FRBM Review Committee recommended specific debt-to-GDP targets for the Centre and States.
– Central government liabilities are typically higher than State government liabilities as a percentage of GDP.
– States need Central government’s consent to raise loans if they have outstanding loans from the Centre.
The debt-to-GDP ratio is a key indicator of fiscal health. High debt levels can constrain government spending and increase vulnerability to economic shocks. The FRBM Act aims to ensure fiscal discipline.
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