There were 18 Questions from Economy in 2023, of which

• 4 Questions on Capital & Money Market (InviTs, Capital Market Component, Beta, Carbon Market)
• 4 Questions on Money & Banking (Central Banks, Sterilisation, Central Bank Digitl Currencies, SHG-Bank Linkage)
• 2 Questions on International Institutions (GCM, G-20)
• 2 Questions on Industry (MSME, PLI)
• 2 Questions on Agriculture (Small Farmer Large Field, MSP)
• 2 Questions on Economy Basics (Intangible Investment, Sustainable Investment)
• 1 Question on International Trade (Switzerland)
• 1 Question on Finance Commission 

Examiner tested candidates’ knowledge of basic concepts and understanding of current issues in Economy.

The level of the questions was moderate.

Previous Year UPSC Economy Questions (PYQs) With Explanation 2023

1. Consider the following statements: 

Statement I: Switzerland is one of the leading exporters of gold in terms of value. 

Statement-II: Switzerland has the second largest gold reserves in the world. 

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

(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I 

(b) Both statement-I and Statement-Il are correct and Statement-II is not the correct explanation for Statement-I

(c) Statement I is correct but Statement II is incorrect 

(d) Statement I is incorrect but Statement II is correct

1. Ans: c

Explanation:

Switzerland is of particular global importance concerning the trade of gold. About two-thirds of the globally extracted gold is imported, refined, and re-exported by Switzerland. Switzerland is the world’s biggest gold refining and transit hub. 

In 2023, Switzerland’s gold exports amounted to a value of more than 107 billion U.S. dollars. Switzerland is consistently the world’s leading gold exporting country based on value. The United Kingdom was the second-largest gold exporter in 2023 followed by UAE. 

The top three gold exporters do not figure in the world’s top gold producers. 

As per World Gold council Top 5 gold producing countries are: China, Russia, Australia, Canada, United States. 

Gold natural reserves: Australia, Russia and South Africa hold a large share of the world’s gold mine reserves, accounting for 12,000, 12,000 and 5,000 metric tons, respectively in 2024.

The top three countries with largest gold reserves held by Central bank  in the world are the USA Germany, Italy.

Hence, statement 1 is correct & statement 2 is incorrect.

2. 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? 

(a) Both Statement-I and Statement-II are correct and Statement- II is the correct explanation for  Statement-I 

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I 

(c) Statement I is correct but Statement II is incorrect 

(d) Statement I is incorrect but Statement II is correct 

2. Ans: d

Explanation:

What are InvITs?

InvITs are a type of investment vehicle that allows investors to invest in infrastructure projects. The main objective of InvITs is to provide retail investors with access to investment opportunities in infrastructure projects that were previously only available to large institutional investors.

InvITs offer investors the opportunity to invest in a diversified portfolio of infrastructure projects, which can provide stable income streams and potential capital appreciation over the long term. At the same time, it helps infrastructure projects tap into household savings 

InvITs stand out as models of financial innovation aimed at sustainable development. Designed with a tiered structure where a sponsor sets up the InvIT, which then invests in various eligible projects directly or through special purpose vehicles (SPVs), these trusts offer a unique blend of stability and profitability. 

Features and structure of InvITs

Where do they invest?
InvITs are similar to mutual funds or REITs, but they invest in infrastructure assets like toll roads, power transmission lines, and pipelines.

Structure
InvITs are created by sponsors, who are typically infrastructure companies or private equity firms. The sponsor sets up the InvIT and transfers ownership of the underlying infrastructure assets to the trust. The trust then issues units to investors, which represent an ownership stake in the trust and thus the underlying assets. 

Investors in InvITs can earn returns in two ways: through regular distributions and potential capital appreciation. InvITs typically distribute most of their earnings to investors in the form of dividends, which can provide a regular income stream. In addition, if the underlying assets appreciate in value over time, investors can potentially sell their units for a profit.

Who can invest in an InvIT? 

Publiclyplaced listed InvIT –  Any person – resident/foreign 

Privatelyplaced  listed InvIT – Institutional investors and body corporates (Indian/foreign)

Tax implications on unit holders 

Interest income from the SPV distributed by the InvIT

• Resident investor – at applicable rates (credit for taxes withheld at 10%) 

• Non-resident investor (other than foreign portfolio investors (FPIs) – 5%12 (subject to the beneficial provision under the applicable tax treaty) 

• FPIs – may be taxed at 20%12 (subject to the beneficial provision under the applicable tax treaty)

Dividend income  (if SPV has opted for the concessional tax regime under Section 115BAA)

• Resident investor – at applicable rates (credit for taxes withheld at 10%) – benefit of Section 80M extended to domestic unitholder being a company, provided such dividend is distributed within the prescribed timeline 

• Non-resident investor (including FPIs) – 20%12 (subject to the beneficial provision under the applicable tax treaty) 

Dividend income  (if SPV has opted for the old regime)

• Exempt for unitholders 

Distribution of any proceeds other than interest and dividend; not taxable in the hands of InvIT

Distribution in excess of the issue price shall be taxable as income from other sources at applicable rates 

• Resident investor – at applicable rate

s • Non-resident investor (other than FPIs) –  taxable at applicable rates (subject to the beneficial provision under the applicable tax treaty, credit available for taxes withheld)

 • FPIs – 20% (subject to the beneficial provision under the applicable tax treaty)

Sale of listed units (on stock exchanges) 

• Long-term capital gains beyond INR 0.1 million taxable at 10%12 

• Short-term capital gains taxable at a concessional rate of 15%12 

• For non-residents, provisions and rates under applicable tax treaties to be considered

InvITs have been classified as ‘borrowers’ under Section 2(f) of the SARFAESI Act, pursuant to Section 2(da) of the Securities Contracts (Regulation) Act, 1956, which defines ‘pooled investment vehicles’ as inclusive of a ‘business trust’ as defined in Section 2(13A) of the Income-tax Act, 1961 and registered with SEBI, i.e., InvITs.

Hence, statement 1 is incorrect and 2 is correct.

3. 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? 

(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I 

(b) Both Statement-! and Statement-II are correct and Statement II is not the correct explanation for Statement-I 

(c) Statement I is correct but Statement II is incorrect 

(d) Statement I is incorrect but Statement II is correct  

3. Ans: a

Explanation:

Monetary policy during covid the indian case 

The COVID-19 pandemic scarred the global economy, causing unimaginable loss of life and livelihood. 

At the height of the pandemic during 2020 and 2021, the Monetary Policy Committee (MPC) prioritised growth over inflation, given the frail economic conditions and notwithstanding intermittent inflationary pressures from supply shocks. Our monetary policy committee (MPC) reacted swiftly by reducing the policy repo rate sizeably by 115 bps in a span of two months (March-May 2020). Along with the rate cuts, significant quantum of liquidity was infused  through both conventional and unconventional measures to stimulate the economy, restore confidence and revive market activity . 

The liquidity infusion measures were mostly concentrated in 2020 but continued in 2021 in view of fresh waves of the pandemic and the fragile nature of economic recovery.

In early 2022, inflation was expected to moderate significantly however the outbreak of hostilities in Ukraine since end February 2022 changed the  scenario. Initially, the shocks came from food and fuel prices, which were mainly global in origin, but local factors from adverse  weather events also played an important role in increasing food inflation. 

Moreover, strengthening domestic recovery and rising demand enabled pass-through of pent-up input costs to retail goods and services. This imparted stickiness to underlying core inflation and kept headline inflation at elevated levels. 

Under these circumstances, the MPC quickly changed gears by prioritising inflation over growth and also changed its stance from being accommodative to withdrawal of accommodation.

The MPC in May 2022 raised the policy rate by 40 basis points. This was followed by rate hikes, In MPC has raised the policy repo rate by 250 bps cumulatively between May 2022 and February 2023. 

A tight monetary policy by hiking the rates is followed by the central bank to counter inflation.

Hence, statement 1 and 2 are correct & statement 2 is the correct explanation of statement 1.

4. 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? 

(a) Both Statement I and Statement II are correct and Statement II is the correct explanation for Statement I 

(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I 

(c) Statement I is correct but Statement II is incorrect 

(d) Statement I is incorrect but Statement II is correct 

4. Ans: b

Explanation:

Carbon markets have become one of the most widespread tools in the fight against climate change. 21% of the world’s emissions were covered by some form of carbon pricing (by end of 2021). Trading on these markets are growing year -on-year.

Hence, statement 1 is correct.

For the right to release “a tonne of carbon dioxide” into the atmosphere businesses have to pay regulators. The revenue from the sale of carbon permits, can be reinvested by  governments  in renewable energy or other righteous ventures (like subsidy on buying electric vehicles).

Additional Information:

What are Carbon Markets?

Carbon markets are trading systems in which companies or individuals can compensate for their greenhouse gas emissions by purchasing ‘carbon credits’ from entities that remove or reduce greenhouse gas emissions.

One tradable carbon credit equals one tonne of carbon dioxide or the equivalent amount of a different greenhouse gas reduced, sequestered or avoided. The emitters can use these credits as their own to meet their reduction targets.

There are broadly two types of carbon markets: compliance and voluntary. 

• Compliance markets (like emissions trading systems (ETS) of European Union) are created as a result of any national or international regulatory requirement.

The European Union launched the world’s first international ETS in 2005. In 2021, China launched the world’s largest ETS.

Currently ETS Mechanism is in force in 29 countries and under consideration in 11 countries. In India ETS mecahnism is under consideration.

The Clean Development Mechanism (CDM), adopted under the Kyoto Protocol in 1997, is another example of an international compliance market. Under the CDM, emission-reduction projects in developing countries have generated carbon credits used by industrialized countries to meet part of their emission reduction targets.

• Voluntary carbon markets – national and international – are outside the regulatory requirements.

The demand for voluntary comes from private individuals that want to compensate for their carbon footprints, corporations with corporate sustainability targets, and other actors aiming to trade credits at a higher price to make a profit.

Hence, statement 2 is correct, but statement 2 doesn’t explain statement 1. 

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

(a) Conducting ‘Open Market Operations’ 

(b) Oversight of settlement and payment systems 

(c) Debt and cash management for the Central and State Governments 

(d) Regulating the functions of Nonbanking Financial Institutions 

5. Ans: a

Explanation:

Sterilization provides a way out of the problem of clash between the goals of external balance and internal balance. Sterilization refers to the action by the Central Bank of a country to offset or cancel the impacts of its foreign exchange market intervention on the moeny supply through open market operations. The sterilization measures can be used both to offset the reduction in money supply when in case of current account deficit the Central Bank of the country sells foreign exchanges omn the market and also when the Central bank offset the effect of increase in money supply when it buys foreign exchange from the market in case of surplus in balance of payments or when large capital inflows are coming into the economy.

Through sterilization, the central bank tries to off set the changes in foreign exchange reserve either by changing net domestic assets or by changing the reserve deposit. While the purchase intervention is sterilized by issuing bonds, purchasing bonds from the market sterilizes the sale intervention. 

Sterilization is the process of neutralizing the changes in the net foreign assets (NFA) (which are caused by the intervention) by adjusting the net domestic assets (NDA) with the objective of maintaining the stability of the monetary base. As a process, sterilization neutralizes the impact of exchange market operations on domestic money supply with the help of money market instruments

RBI uses Open Market Operation (OMO) as the primary sterilization instrument

Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.

Market Stabilisation Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilised is held in a separate government account with the Reserve Bank. 

Hence, option a is correct.

6. 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? 

(a) Only one 

(b) Only two 

(c) Only three 

(d) All four

6. Ans: b

Explanation:

The Indian Financial system refers to the borrowing and lending of funds demand for and supply of funds. It consists of two parts

1. Indian Money market and 2. Indian Capital market

The Indian Money market is the market in which short term funds are borrowed and lent.

The Capital market is market for medium and long term funds.

Money Market consists of two parts unorganised and organised sectors. The unorganised sector consists of indigenous bankers and money lenders

Organised money market in India comprises RBI, public sector banks, and private banks (both Indian and Foreign). The organised money market has a number of submarkets such as Call money market, Billmarket, Repos, Certificate of deposits(CDs) and commercial papers(CPs).

Capital Market is the market for long term funds. Capital Market in India comprise of Government

securities Market, Industrial Securities market, Developmental Financial Institutions, Financial

intermediaries like- Merchant banks, Mutual Funds, Leasing companies, Venture capital companies etc.

Hence, option b is correct.

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

(a) 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.

(b) Many marginal farmers in an area organize themselves into groups and synchronize and harmonize selected agricultural operations .

(c) 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 payment of an agreed amount to the farmers .

(d) 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 

7. Ans: b

Explanation: 

Small Farmer Large Field

The  basics  of  the  model  are  that  smallholders  join  and  decide  to  grow  a  crop of  one  or  two  varieties,  synchronize  all  the  agricultural  operations  (seed to  seed)  as  a  group/community  and  gain  higher  bargaining  power  while  dealing  with  service  providers,  dealers,  and  traders/millers.  As a result  there would be  reduced  cost  of  production  of ,  increased  grain  yield,  comparatively  higher  price  over  prevailed  market  price,  enhanced farmers’  gross  income  and  net  profit.

Hence, option b is correct.

8. Consider the following statements: 

1. The Government of India provides Minimum Support Price for niger (Guizotia aoyssinica) seeds. 

2. Niger is cultivated as a Kharif crop. 

3. Some tribal people in India use niger seed oil for cooking.  

How many of the above statements are correct? 

(a) Only one 

(b) Only two 

(c) All three 

(d) None 

8. Ans: c

Explanation:

The Government’s price policy for major agricultural commodities seeks to ensure

remunerative prices to the growers for their produce with a view to encourage higher investment and production and thereby to safeguard the interest of consumers by making available supplies at reasonable prices. 

The Government fixes MSP of 22 mandated agricultural crops on the basis of the recommendations of Commission for Agricultural Costs & Prices (CACP) and after due consideration of the views of State Governments and the concerned Central Ministries/ Departments. 

The 22 mandated crops include 14 Kharif crops viz. paddy, jowar, bajra, maize,

ragi, tur (arhar), moong, urad, groundnut, soybean (yellow), sunflower seed, sesamum, nigerseed, cotton and 6 Rabi crops viz. wheat, barley, gram, masur (lentil), rapeseed and mustard, safflowerand 2 commercial crops viz. jute and copra. 

Hence, statements 1 and 2 are correct.

The major edible oils consumed in the country are mustard, soyabean, groundnut, sunflower sesame oil, niger seed, safflower seed, castor and linseed (primary source) and coconut, palm oil, cottonseed, rice bran, solvent extracted oil, tree & forest origin oil. 

Hence, statement 3 is correct.

9. 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? 

(a) Only one 

(b) Only two

(c) Only three 

(d) All four 

9. Ans: c

Explanation: 

Intangible assets refer to non-physical assets that companies create or acquire. Unlike tangible assets, self-created intangible assets are not recorded on the balance sheet and therefore do not have a book value. 

The primary categories of intangible assets include goodwill, brand equity, and various forms of intellectual property such as trade secrets, patents, trademarks, and copyrights. Other examples include licensing agreements, customer lists, and research and development (R&D) activities.

Typically, the values of intangible assets are not reflected on the balance sheet. However, when companies engage in mergers or acquisitions, the value of the acquired intangible assets is recorded as a list on the acquiring company’s balance sheet.

Hence, option c is correct.

10. Consider the following: 

1. Demographic performance 

2. Forest and ecology 

3. Governance reforms 

4. Stable government 

5. Tax and fiscal efforts 

For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance? 

(a) Only two 

(b) Only three 

(c) Only four 

(d) All five 

10. Ans: b

Explanation:

Horizontal devolution:

Based on principles of need, equity and performance, overall devolution  formula is  based on following 6 criteria

Income distance is the distance of the Gross State Domestic Product (GSDP) of a particular state from the state with the highest GSDP.

To maintain inter state equity, the states with lower per capita income would be given a higher share.

Hence, option b is correct.

11. Consider the following infrastructure sectors: 

1. Affordable housing 

2. Mass rapid transport 

3. Health care 

4. Renewable energy 

On how many of the above does the UNOPS Sustainable Investments in Infrastructure and Innovation (S3i) initiative focus on its investments? 

(a) Only one 

(b) Only two · 

(c) Only three 

(d) All four

11. Ans: c

Explanation: 

Sustainable development, a global imperative, calls for innovative approaches to address the world’s most pressing challenges.

The United Nations Office for Project Services (UNOPS) has embarked on a transformative journey through its Sustainable Investments in Infrastructure and Innovation (S3i) initiative.

In line with the UNOPS Strategic Plan, 2022-2025, the S3i office will seek to enhance and accelerate the effort of engaging public and private sector investors to work collectively to scale up infrastructure investments and consider co-creating innovative financing options. The UNOPS S3i will continue rolling out the initiative across its three focus-areas: (a) affordable housing; (b) renewable energy; and (c) health infrastructure.

Hence, option c is correct.

12. Consider the following statements with reference to India: 

1. According to the ‘Micro, Small and Medium Enterprises Development  (MSMED) Act, 2006’, the ‘medium enterprises’ are those with investments in plant and machinery between 15 crore and 25 crore.

2. All bank loans to the Micro, Small, and Medium Enterprises qualify under the priority sector. 

Which of the statements given above are correct? 

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2 

12. Ans: b

Explanation:

Central Government,  notified the following criteria for classification of micro, small and medium enterprises, namely:— 

(i)   a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

(ii)  a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;   

(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred  and fifty crore rupees.  

Now, there will be no difference between manufacturing and service sectors.

All bank loans to MSMEs, engaged in providing or rendering of services as defined in terms of investment in equipment under MSMED Act, 2006, shall qualify under priority sector without any credit cap.

Hence, statement 1 is incorrect & 2 is correct.

13. With reference to Central Bank digital currencies, consider the following statements: 

1. It is possible to make payments in a digital currency without using the US dollar or the SWIFT system. 

2. A digital currency can be distributed with a condition programmed into it such as a timeframe for spending it. 

Which of the statements given above are correct? 

(a) 1 only 

(b) 2 only 

(c) Both 1 and 2 

(d) Neither 1 nor 2 

13. Ans: c

Explanation:

A central bank digital currency (CBDC) represents a digital form of public currency issued by a central bank. This system allows individuals and businesses to access a digital currency facilitated by their country’s central bank for various transactions and savings.

In essence, a CBDC is a digital representation of traditional coins and banknotes, manifested as digital tokens. These tokens are essentially electronic files that hold a specific value, linked to an identifiable owner. The transfer of value occurs seamlessly by altering the ownership reference, which facilitates payment.

A distinguishing feature of CBDCs compared to other electronic payment forms is their legal tender status. This means that individuals participating in transactions involving CBDCs have a direct claim to the central bank that issues the currency, reinforcing its legitimacy and acceptance.

Additionally, CBDCs can incorporate programmability, meaning they can come with predefined rules that govern how the money can be used. This feature allows a government to implement measures such as positive or negative interest rates to encourage or discourage spending on particular goods, restrict usage to specific categories of services, or even establish expiration dates for certain transactions.

Hence, both statements 1 & 2 are correct.

14. In the context of finance, the term ‘beta’ refers to 

(a) the process of simultaneous buying and selling of an asset from different platforms 

(b) an investment strategy of a portfolio manager to balance risk versus reward 

( c) a type of systemic risk that arises where perfect hedging is not possible 

(d) a numeric value that measures the fluctuations of a stock to changes in the overall stock market

14. Ans: d

Explanation:

Beta is an important statistical metric used to assess the volatility of a specific stock in relation to the overall market, which is typically represented by a market index. In this context, the market itself serves as a benchmark, with a beta value of 1.

 A stock with a beta greater than 1 indicates that it is likely to experience greater price changes compared to the market; it is expected to rise more during market upswings and fall more during downturns. On the other hand, stocks with a beta of less than 1 are anticipated to have smaller fluctuations, rising less in a bull market and falling less in a bear market. Interestingly, there are rare instances where a stock may exhibit a negative beta, signifying that it moves in the opposite direction of the market trends.

Hence, option d is correct.

15. Consider the following statements: 

1. The Self-Help Group (SHG) program was originally initiated by the State Bank of India by providing microcredit to the financially deprived. 

2. In an SHG, all members of a group take responsibility for a loan that an individual member takes. 

3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs. 

How many of the above statements are correct? 

(a) Only one 

(b) Only two 

(c) All three 

(d) None

15. Ans: b

Explanation:

The SHG-Bank Linkage programme that synthesizes ‘formal financial systems’(in terms of a formal institution providing credit) with the ‘informal sector’(comprising of rural poor with no formal credit history – exclusively women in case of DAY-NRLM), has emerged as a preferred vehicle for providing financial services to the hitherto unbanked poor. The Self-Help Group – Bank Linkage Programme (SHG-BLP) was formulated by NABARD in 1989 and was launched as a pilot project in 1992 to integrate unreached rural poor with the formal sector by providing access to institutional credit. The banks were encouraged to lend directly to SHGs with refinance support from NABARD.

The pilot project was conceived of as a partnership between SHGs, Banks and NGOs in which the Reserve Bank of India (RBI) allowed banks to lend directly to SHGs and NABARD committed to providing re-finance and promotional support. NABARD acted as the catalyst for the SHGBank Linkage programme 

Hence, statement 1 is incorrect.

All  members take mutual guarantee for  loans taken by the SHG.  In such cases, a smaller “Joint Liability Group (JLG)” from members of an SHG may be created. The members of JLG will continue to remain members of the SHGs and continue to participate in the activities of SHGs are earlier. Banks may encourage creation of such enterprise / livelihood based JLGs as a separate entity. There is a Strategic shift away from targeting individuals to group oriented lending approach (e.g. Integrated Rural Development Program to Swarnajayanti Gram Swarozgar Yojana).

 SHG lending is part of priority sector guidelines for Banks in India comprising of commercial , cooperatives and RRBs 

Hence, statement 2 and 3 are correct.

16. Consider the following statements :

Statement-I : India accounts for 3.2% of global export of goods.

Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India’s ‘Production-linked Incentive’ scheme. 

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

(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I
(c) Statement-I is correct but Statement-II is incorrect
(d) Statemeent-I is incorrect but Statement-II is correct.

16. Ans: d

Explanation: 

India’s share in global merchandise exports rose from 0.9 per cent in 2005 to 1.8 per cent in 2023, while its share in services exports more than doubled from 2 per cent to 4.3 per cent.

Hence, statement 1 is incorrect.

Production-linked Incentive

Launched in 2020, the PLI Scheme is more than just a policy; it is a strategic leap toward self-reliance. PLI Schemes focus on 14 critical sectors, each strategically chosen to enhance the country’s manufacturing prowess, foster technological advancements, and elevate India’s position in global markets. These sectors are aligned with the government’s goal of strengthening domestic production and expanding exports, contributing to the broader vision of Atmanirbhar Bharat.

By targeting industries like electronics, textiles, pharmaceuticals, and automobiles, the initiative offers financial incentives tied directly to measurable outcomes such as higher production and incremental sales. 

This performance-driven approach not only attracts investments from domestic and global players but also encourages businesses to embrace cutting-edge technologies and achieve economies of scale.

The Production Linked Incentive (PLI) Schemes have made significant strides in transforming India’s manufacturing landscape.  

Exports have also seen a substantial uptick, driven by key sectors such as electronics, pharmaceuticals, and food processing.

The Production Linked Incentive Scheme (PLI Scheme) by the government of India encourages domestic manufacturing and incremental sales to reduce reliance on imports. 

Hence, statement 2is correct.

17. Consider the following statements:

1. Recently, all the countries of the United Nations have adopted the first-ever compact for international migration, the ‘Global Compact for Safe, Orderly and Regular Migration (GCM)’.

2. The objectives and commitments stated in the GCM are binding on the UN member countries.

3. The GCM addresses internal migration or internally displaced people also in its objectives and commitmentS.

How many of the above statements is/are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

17. Ans: d

Explanation:

The Global Compact for Safe, Orderly and Regular Migration, negotiated under the auspices of the United Nations, is the first intergovernmental agreement to cover all dimensions of international migration. It provides a significant opportunity to improve migration governance.

The UN Global Compact on Safe, Orderly and Regular Migration was adopted by 164 nations in Marrakech in December 2018 and not all the countries of United Nations adopted it.

Hence statement  1 is incorrect.

It is a non-legally binding, cooperative framework that upholds the sovereignty of States and their obligations under international law. The Global Compact is designed to:

• Support international cooperation on the governance of international migration (including humanitarian, developmental and human rights aspects);
• Provide a comprehensive toolkit for States from which they can select policy options to address some of the most pressing issues around international migration; 
• Give States the space and flexibility to pursue implementation based on their own migration realities and capacities.

Hence, statements 2 and 3 are incorrect. 

18. Consider the following statements about G-20:

1. The G-20 group was originally established as a platform for the Finance Ministers and Central Bank Governors to discuss the international economic and financial issues.

2. Digital public infrastructure is one of India’s G-20 priorities.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

18. Ans: c

Explanation:

The G20 was founded in 1999 after the Asian financial crisis as a forum for the Finance Ministers and Central Bank Governors to discuss global economic and financial issues.

The G20 was upgraded to the level of Heads of State/Government in the wake of the global economic and financial crisis of 2007, and, in 2009, was designated the premier forum for international economic cooperation.

The G20 Summit is held annually, under the leadership of a rotating Presidency. The G20 initially focused largely on broad macroeconomic issues, but it has since expanded its agenda to inter-alia include trade, sustainable development, health, agriculture, energy, environment, climate change, and anti-corruption.

Hence statement 1 is correct.

As part of the G20 India Presidency, Global Partnership of Financial Inclusion (GPFI) Working Group arrived at the  consensus on the description of DPI. The G20 DEMM Outcome Document defines  Digital public infrastructure (DPI) as “a set of shareddigital systems that shouldbe secure and interoperable, and can be built on open standards and specifications to deliver and provide equitable access to public and / or private services at societal scale. So DPI is one of India’s G-20 priorities.

Hence statement 2 is correct.