Are you preparing for UPSC CSE Prelims 2026? Check your progress and revise your topics through this quiz on Economy.
UPSC Lifebloods brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today’s subject quiz on the Economy to check your progress.
QUESTION 1
With reference to the aviation fuel, consider the following statements:
1. Aviation Turbine Fuel (ATF) is a high-quality petrol-based fuel.
2. The sustainable aviation fuel (SAF) is produced from feedstocks.
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
Relevance: The question tests basic understanding of fuel types and classifications. It is important due to increasing focus on sustainable fuels and decarbonisation.
Explanation:
— Even as the prices of aviation turbine fuel (ATF), or jet fuel, have surged globally due to the raging West Asia war, the price of the fuel for domestic scheduled flights in India has been hiked only partially by the public sector oil marketing companies (OMCs), according to the Ministry of Petroleum and Natural Gas (MoPNG).
— Aviation Turbine Fuel (ATF), sometimes known as jet fuel, is a specialised, high-quality kerosene-based fuel that is refined specifically to power aircraft gas turbine engines. Hence, statement 1 is not correct.
— The sustainable aviation fuel (SAF) is a biofuel that is produced from sustainable feedstocks and has chemistry similar to conventional aviation turbine fuel (ATF) or jet fuel, which is derived from crude oil. Hence, statement 2 is correct.
— The year 2027 will be an important one for adoption of SAF globally with the mandatory phase of CORSIA kicking in. CORSIA, which applies to international flights, would require airlines globally to offset any growth in carbon dioxide emissions beyond the 2020 levels. India, too, will have to comply with the mandatory phase starting 2027. In line with the CORSIA framework, India’s National Biofuel Coordination Committee (NBCC) has set the initial indicative targets for blending of SAF with jet fuel 2027 onwards, starting with international flights. The indicative targets are: 1 per cent blending in 2027 and 2 per cent in 2028.
Therefore, option (b) is the correct answer.
QUESTION 2
With reference to the Special Economic Zones (SEZs), consider the following statements:
1. The functioning of the SEZs is governed by a three tier administrative set up.
2. All the proposals for setting up of units in the SEZ are approved at the Zone level.
3. The state governments cannot offer concessions for SEZs.
4. The performance of the SEZ units are periodically monitored by the Ministry of Finance.
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Relevance: The question is important for understanding Centre–State roles and approval mechanisms. Aspirants must read about SEZ in brief. It is frequently in current affairs, which makes this topic crucial for UPSC prelims.
Explanation:
— As the West Asia war entered its fifth week, the government on Wednesday implemented concessions for Special Economic Zones (SEZs) announced during the Union Budget 2026-27. SEZ manufacturers have been facing pressures amid global geopolitical tensions and the US tariff impact from last year. This “one-time concession” will remain in place from April 1, 2026, to March 31, 2027, the government said.
— According to the sezindia.gov.in –
— “The functioning of the SEZs is governed by a three tier administrative set up. The Board of Approval is the apex body and is headed by the Secretary, Department of Commerce. The Approval Committee at the Zone level deals with approval of units in the SEZs and other related issues. Each Zone is headed by a Development Commissioner, who is ex-officio chairperson of the Approval Committee. Hence, statement 1 is correct.
— Once an SEZ has been approved by the Board of Approval and Central Government has notified the area of the SEZ, units are allowed to be set up in the SEZ. All the proposals for setting up of units in the SEZ are approved at the Zone level by the Approval Committee consisting of Development Commissioner, Customs Authorities and representatives of State Government. Hence, statement 2 is correct.
— All post approval clearances including grant of importer-exporter code number, change in the name of the company or implementing agency, broad banding diversification, etc. are given at the Zone level by the Development Commissioner.
— The performance of the SEZ units are periodically monitored by the Approval Committee and units are liable for penal action under the provision of Foreign Trade (Development and Regulation) Act, in case of violation of the conditions of the approval.” Hence, statement 4 is not correct.
— While SEZs are administered by central law, state governments play an important supportive role. They can offer extra incentives like subsidised land, stamp duty exemptions, electricity duty waivers, and municipal tax breaks. Hence, statement 3 is not correct.
Therefore, option (b) is the correct answer.
QUESTION 3
With reference to the power generation, consider the following statements:
1. Power generated from gas-based units is cheaper than coal and renewable energy.
2. Coal-based power plants dominate India’s electricity generation mix, contributing over 70%.
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
Relevance: The question checks conceptual clarity on energy economics. It is important for students to understand India’s energy mix and dependency patterns. Aspirants must also read about the contribution of renewable energy.
Explanation:
— As India heads into a “hotter-than-normal” summer, with forecasts pointing to an above-average number of heatwave days, the government plans to rely more on coal-based power to meet peak summer demand.
— Coal-based power plants already dominate India’s electricity generation mix, contributing over 70%. Gas contributes around 1-2% in the country’s overall power generation. Hence, statement 2 is correct.
— Power generated from gas-based units is typically more expensive than coal and renewable energy. However, due to their flexibility, they are generally used during high-demand periods, such as peak summer months when cooling demand surges, to meet evening peak demand. Hence, statement 1 is not correct.
— In the past, the government has invoked emergency measures to ensure utilities operate both gas and coal plants at full capacity when soaring temperatures push electricity consumption to record levels.
Therefore, option (b) is the correct answer.
QUESTION 4
The Ways and Means Advances (WMA) is:
(a) a long-term concessional loan provided by the International Monetary Fund to member countries for balance of payments crises.
(b) a grant-in-aid released by the Ministry of Finance to states for infrastructure development without repayment obligations.
(c) a mechanism through which the Reserve Bank of India directly finances fiscal deficits of the government on a permanent basis.
(d) a short-term interest-bearing advance – to the Governments, to meet temporary mismatches in their receipts and payments.
Relevance: The WMA is an important finance tool. The question tests conceptual clarity on government financing instruments and fiscal management tools. UPSC may ask questions on specific terms, which are frequently in news. Aspirants must read about these terms in detail.
Explanation:
— The Reserve Bank has well defined obligations and provides several banking services to the Governments. As a banker to the Government, the Reserve Bank receives and pays money on behalf of the various Government Departments. It provides Ways and Means Advances – a short-term interest-bearing advance – to the Governments, to meet temporary mismatches in their receipts and payments.
Therefore, option (d) is the correct answer.
(Source: http://www.rbi.org.in)
QUESTION 5
With reference to the MGNREGS in the 2025–26, consider the following statements:
1. The number of households that availed MGNREGS in the 2025–26 fiscal year was higher than last year.
2. The figure for the 2025-26 fiscal year does not include Assam’s beneficiaries.
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
Relevance: The question tests awareness of recent trends in flagship schemes like MGNREGA. Aspirants must focus on data interpretation and exceptions in official reporting. As it is linked with current affairs, which makes it an important pick for UPSC.
Explanation:
— As the NDA government moves to replace the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) with the Viksit Bharat–Guarantee for Rozgar and Ajeevika Mission (GRAMIN).
— The official data shows that 5.32 crore households availed the scheme in the 2025–26 fiscal year, an 8 per cent decline from the previous year. The number of households that availed MGNREGS in the 2025–26 fiscal year was lower than last year’s 5.78 crore. Hence, statement 1 is not correct.
— The figure for the 2025-26 fiscal year does not include West Bengal’s beneficiaries, as no work was taken up under MGNREGS in the state. In 2025-26, MGNREGS demand was higher only during May-June compared to the corresponding months of the previous fiscal year, while it was lower in the other months. Hence, statement 2 is not correct.
Therefore, option (d) is the correct answer.
