UPSC Essentials | Daily Subject-Wise Quiz: Economy MCQs on Debt-to-GDP Ratio, Saffron Cultivation in PPP Mode and More (Week 148)
Are you diligently preparing for the UPSC Civil Services Examination Prelims 2026? It is crucial to regularly assess your progress and revise essential topics to ensure thorough preparation. This comprehensive quiz on Economy is specifically designed to help you achieve that goal. Written by Nitendra Pal Singh, this 8-minute read offers valuable insights and practice questions.
New Delhi, February 5, 2026, 08:27 PM IST: Check your progress and revise your topics through this detailed quiz on Economy. This initiative by UPSC Essentials focuses on subject-wise quizzes that target important static syllabus topics. Today's quiz includes a significant question on the debt-to-GDP ratio, a key economic indicator.
QUESTION 1: Understanding the Debt-to-GDP Ratio
With reference to the debt-to-GDP ratio, consider the following statements:
- The debt-to-GDP ratio is a metric that compares a country’s public debt to its gross domestic product (GDP).
- The Central Government has projected the debt-to-GDP ratio to decline to 50±1% by March 2031.
- The real GDP growth forms the basis of the debt-to-GDP ratio.
How many of the statements given above are correct?
- (a) Only one
- (b) Only two
- (c) All three
- (d) None
Relevance: This topic is frequently covered in the Economic Survey, Union Budget, and FRBM framework, making it a high-probability area for Prelims. The question tests the distinction between nominal and real GDP, a common pitfall in UPSC exams regarding fiscal statistics.
Explanation: The Central Government has projected a decline in the debt-to-GDP ratio to 50±1% by March 2031 from an estimated 56.1% in March 2026. Economists anticipate the Centre to set it at 55% of GDP for FY27 in the Budget, confirming statement 2 as correct. Statement 1 is accurate as the ratio indeed compares public debt to GDP. However, statement 3 is incorrect because the debt-to-GDP ratio depends on nominal GDP growth, not real GDP growth, along with government borrowing and repayment obligations. Factors like the implementation of the 8th Pay Commission recommendations may also influence future financial burdens. Therefore, option (b) is the correct answer.
QUESTION 2: RBI's Role in Encouraging Economic Activity
When the RBI wants to encourage economic activity in the economy, it:
- (a) reduces the repo rates
- (b) increases the repo rates
- (c) reduces the reverse repo rates
- (d) increases the reverse repo rates
Relevance: This question evaluates core monetary policy transmission, a static concept often tested in Prelims. It connects RBI's policy tools with the growth-inflation trade-off, an important topic for UPSC aspirants.
Explanation: The Reserve Bank of India's Monetary Policy Committee is expected to maintain the repo rate unchanged in its upcoming meeting. The repo rate is the interest rate charged by RBI when commercial banks borrow money, while the reverse repo rate is paid by RBI for banks' excess cash. To stimulate economic activity, RBI reduces repo rates, enabling commercial banks to lower interest rates on loans and deposits. This encourages spending and investment, as savings yield less and borrowing costs decrease. Thus, option (a) is correct.
QUESTION 3: The 'CHAKRA' — Centre of Excellence (CoE)
With reference to the 'CHAKRA' — Centre of Excellence (CoE), consider the following statements:
- It is a platform for financing sunrise sectors.
- The semiconductors and decarbonisation sectors are excluded from the CHAKRA.
- It has been launched by the RBI.
Which of the statements given above is/are correct?
- (a) 1 and 3 only
- (b) 2 and 3 only
- (c) 1 only
- (d) 3 only
Relevance: Bank-led financing initiatives like CHAKRA are vital for Prelims, combining public sector banks, sunrise sectors, and green technology. This question links economic policy to energy transition and strategic technology, key areas in recent exams.
Explanation: The State Bank of India launched CHAKRA to finance eight sunrise sectors, including renewable energy, battery storage, data centres, smart infrastructure, electric mobility, green hydrogen, semiconductors, and decarbonisation. Hence, statement 1 is correct, while statements 2 and 3 are incorrect as semiconductors and decarbonisation are included, and SBI, not RBI, launched it. SBI Chairman C S Setty emphasized that CHAKRA supports innovation and sustainability in India's growth. Therefore, option (c) is correct.
QUESTION 4: iCET and TRUST Initiatives
The iCET and TRUST initiatives are associated with:
- (a) India-EU partnership on green financing and climate transition
- (b) India-US strategic collaboration in crucial and emerging technologies
- (c) Quad Framework for Indo-Pacific Supply Chain Resilience
- (d) WTO-led changes regarding technology transfer and intellectual property
Relevance: These initiatives are recent and relate to cooperation in advanced technologies and innovation ecosystems. The question tests the ability to correctly map initiatives to their institutional frameworks amid similar global groupings.
Explanation: The India-US trade deal, complemented by iCET and TRUST initiatives, strengthens trusted supply chains and deepens technology collaboration. It enhances India's role as a manufacturing and innovation hub, accelerating semiconductor design, AI, and advanced manufacturing. This partnership aims for $500 billion bilateral trade, with over $100 billion potentially from electronics and semiconductors. Thus, option (b) is correct.
QUESTION 5: Saffron Cultivation in PPP Mode
Which of the following states is allowing private companies to participate under a public-private-partnership (PPP) model to take up large-scale saffron cultivation?
- (a) Kerala
- (b) Karnataka
- (c) Meghalaya
- (d) Andhra Pradesh
Relevance: This question connects state agricultural policy with innovative PPP approaches, a recurring theme in Prelims. It helps distinguish states expanding high-value crop cultivation beyond traditional regions.
Explanation: Andhra Pradesh Chief Minister N Chandrababu Naidu announced plans to attract entrepreneurs and private companies under a PPP model for large-scale saffron cultivation at Lambasingi in Alluri Sitharama Raju district. Known as the 'Kashmir of the South,' Lambasingi aims to diversify saffron production, currently primarily in Kashmir. Therefore, option (d) is correct.
This quiz is part of a series that includes previous editions on History, Culture, Social Issues, Polity, Governance, Science, Technology, Environment, Geography, and International Relations. Regularly engaging with such quizzes can significantly enhance your UPSC preparation by reinforcing key concepts and improving recall.
