Daily Prelims MCQs — Economy — 16th July 2025
- TPP
- Jul 16
- 6 min read
Welcome to today’s handpicked set of Multiple-Choice Questions (MCQs) from the Economy — crafted specially for the UPSC Prelims! These questions aren’t just a quiz — they’re a smart way to see how current affairs connect with core concepts, just like UPSC asks in the exam.
Each question is based on recent news and backed by clear explanations to help you build strong links between dynamic events and static knowledge.
Today’s topics include: Gini Index (or Gini Coefficient), Corporate Average Fuel Efficiency, Belt and Road Initiative, coking coal, deposit insurance in India and more...
Click Here to read the Monthly Current Affairs Pointers (CAP).
QUESTION 1
Regarding the Gini Index (or Gini Coefficient) as a measure of inequality, consider the following statements:
The Gini Index provides insights into how fairly income, wealth, or consumption is spread among individuals or households within a nation.
As per the World Bank’s Poverty and Equity Brief, India’s Gini Index stands at 25.5, positioning it as the fourth most equal society globally.
Between 2011-12 and 2022-23, India’s consumption-based Gini Index exhibited an upward trend, indicating rising inequality.
How many of the above statements are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Answer (b)
Explanation:
Statement 1 is correct: The Gini Index (or coefficient), named after Italian statistician Corrado Gini, is widely accepted as a tool to quantify economic inequality. It measures the dispersion of income, wealth, or consumption within a population. A Gini value of 0 denotes perfect equality, while 1 (or 100%) reflects maximum inequality.
Statement 2 is correct: According to the World Bank's Poverty and Equity Brief, India's Gini Index is estimated at 25.5, placing it among the most equal countries globally, specifically fourth, after Slovak Republic, Slovenia, and Belarus. This reflects a relatively equitable distribution of economic progress.
Statement 3 is incorrect: Contrary to the claim, India’s consumption-based Gini Index decreased, moving from 28.8 in 2011-12 to 25.5 in 2022-23, indicating improved consumption equality. However, it’s worth noting that income inequality, based on data from the World Inequality Database, rose from a Gini of 52 in 2004 to 62 in 2023, highlighting disparities that consumption data may underestimate. For instance, the top 10% earned 13 times more than the bottom 10% in 2023-24.
QUESTION 2
With reference to automobile emission and efficiency regulations in India, consider the following statements:
The Corporate Average Fuel Efficiency (CAFE) standards are designed to regulate a wide spectrum of vehicular emissions, including particulate matter and nitrogen oxides (NOx).
The Bharat Stage VI (BS VI) norms primarily aim to enhance fuel efficiency and reduce carbon dioxide (CO₂) emissions.
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (d)
Explanation:
Statement 1 is incorrect: The CAFE (Corporate Average Fuel Efficiency) regulations are centered around improving fuel economy and reducing CO₂ emissions from vehicles. They do not cover pollutants such as NOx (nitrogen oxides) or particulate matter. Those are regulated under different standards.
Statement 2 is also incorrect: The BS VI (Bharat Stage VI) emission norms target a wide array of harmful pollutants, including NOx, particulate matter, hydrocarbons, and carbon monoxide. They do not focus on fuel efficiency or CO₂ emissions. Instead, that responsibility lies with CAFE norms.
Additional context:
Both CAFE and BS VI standards currently rely on the Modified Indian Driving Cycle (MIDC) for emission testing.
However, there's a proposed shift towards adopting the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) by March 31, 2027, as per the Bureau of Energy Efficiency’s (BEE) 2024 recommendations.
The WLTP, already implemented by the European Union since 2018, offers more realistic on-road emission values, including CO₂, NOx, and particulate matter.
QUESTION 3
Consider the following statements regarding Cambodia’s ties with China:
Cambodia was among the first and most enthusiastic participants in China’s ambitious Belt and Road Initiative (BRI).
China is the largest contributor to Cambodia’s infrastructure development, funding sectors such as roads, bridges, dams, railways, and special economic zones (SEZs).
Which of the above statements is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer (c)
Explanation:
Statement 1 is correct: Cambodia emerged early as one of the most proactive supporters of China’s Belt and Road Initiative (BRI) — Beijing’s global strategy to finance and build large-scale infrastructure abroad. Phnom Penh aligned itself closely with China’s development vision, strengthening political and economic ties.
Statement 2 is correct: China stands as the leading financier of Cambodia’s infrastructure projects. Major investments include the construction of highways, bridges, hydropower dams, rail lines, and special economic zones (SEZs) — all central to Cambodia’s economic modernization.
Cambodia, along with Thailand, has received substantial Chinese investment over the past decade. This growing alignment prompted the U.S. to impose a 36% tariff on imports from these countries. Following earlier rounds of global trade disputes, China intensified engagement with ASEAN, bolstering regional supply chains and expanding digital and green cooperation through an upgraded China-ASEAN Free Trade Agreement.
QUESTION 4
Consider the following statements about coking coal:
The import of coking coal has consistently increased from 2020–21 to 2023–24.
India included coking coal in the list of critical minerals in 2022.
It is mainly imported by the refining industry.
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Answer (d)
Explanation:
Statement 1 is incorrect: Coking coal imports have not increased consistently from 2020–21 to 2023–24. The figures have fluctuated during this period, as shown below:
Year | Coking Coal | Non-Coking Coal | Total Coal Import |
2020–21 | 51.20 | 164.05 | 215.25 |
2021–22 | 57.16 | 151.77 | 208.93 |
2022–23 | 56.05 | 181.62 | 237.67 |
2023–24 | 58.81 | 205.72 | 264.53 |
2024–25* | 30.31 | 99.21 | 129.52 |
(*Figures up to April–September 2024; Source: Coal Controller’s Organisation)
There is no steady upward trend in the coking coal imports across these years.
Statement 2 is incorrect: Coking coal has not yet been included in India’s list of critical minerals. However, the NITI Aayog, in its report titled “Enhancing Domestic Coking Coal Availability to Reduce the Import of Coking Coal”, recommended that the government should classify coking coal as a critical mineral and give special attention to domestic production. The report highlighted the importance of coking coal in achieving India’s Net Zero by 2070 commitment and suggested fully utilizing India’s 16.5 billion tonnes of proven medium coking coal reserves.
Statement 3 is incorrect: Coking coal is mainly used by the steel industry, particularly in the metallurgical process for making steel. It is not used by the refining industry. In contrast, non-coking coal is used by sectors like power generation, cement production, and by coal traders.
QUESTION 5
With reference to deposit insurance in India, consider the following statements:
The insurance cover of Rs 2 lakh per depositor applies to all accounts held by the depositor across all branches of an insured bank.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) insures only commercial banks, including foreign bank branches in India, and does not insure regional rural banks.
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
Answer (d)
Explanation:
Statement 1 is not correct: The current insurance cover provided by the DICGC is Rs 5 lakh, not Rs 2 lakh. This limit applies per depositor, per insured bank, including the total of all deposit accounts (savings, fixed, current, and recurring) held by the depositor in all branches of that bank. The government is considering raising this limit further.
Statement 2 is not correct: The DICGC insures more than just commercial banks. It covers:
All commercial banks (including branches of foreign banks operating in India)
Regional rural banks (RRBs)
Local area banks
Cooperative banks (except primary cooperative societies)
It does not insure:
Primary cooperative societies
Deposits of foreign, central, or state governments
Interbank deposits
The DICGC functions under the Reserve Bank of India and is meant to protect small depositors from losing their savings in case of bank failures.
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