Daily Prelims MCQs — Economy — 2nd July 2025
- TPP
- Jul 2
- 8 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: free fall in the rupee’s value, hydrogen-based microgrid system, International Potato Center (CIP), wilful defaulter, Tendulkar recommendation, Tax Deducted at Source (TDS), GENIUS Act, and more…
Click Here to read the Monthly Current Affairs Pointers (CAP).
QUESTION 1
With reference to the Indian rupee, consider the following statements:
A free fall in the rupee’s value is primarily prevented by interventions from the Reserve Bank of India (RBI).
A weak balance of payments position supports the stability of the rupee.
External factors, such as the performance of the US dollar, do not affect the value of the Indian rupee.
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Answer (a)
Explanation:
India’s foreign exchange reserves increased by $1.51 billion every week, reaching $658.09 billion on November 29. This reversed an eight-week drop from the all-time high of $704.89 billion set on September 27.
In the almost two months since September 27, not only have forex reserves fallen by $46.79 billion, but the rupee has also weakened from 83.67 to 84.66 against the US dollar.
However, the depletion or accretion of forex reserves is not solely due to FPIs withdrawing or putting money into Indian markets.
Reserve movements are driven by the country’s external balance of payments (BoP) transactions, including current and capital. Current account transactions primarily include the export and import of commodities and services. A good balance of payments situation helps the currency remain stable. Hence, statement 2 is not correct.
In terms of merchandise trade, India has always been a net importer. In 2023-24, its merchandise exports were $441.48 billion, far less than imports of $683.55 billion, resulting in a $242.07 billion trade imbalance.
A free fall in the rupee’s value is primarily prevented by interventions from the Reserve Bank of India (RBI). Hence, statement 1 is correct.
External factors, such as the performance of the US dollar, also affect the value of the Indian rupee. Hence, statement 3 is not correct.
QUESTION 2
With reference to the hydrogen-based microgrid system, consider the following statements:
It uses water to produce hydrogen through electrolysis.
Toyota Kirloskar Motor and Ohmium International, based in the United States, have announced plans to collaborate on the development of a scalable green hydrogen-based microgrid.
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 (c)
Explanation:
Toyota Kirloskar Motor and Ohmium International, a US-based company that manufactures electrolysers in India, have announced plans to collaborate on the development of a scalable green hydrogen-powered microgrid system.
Toyota will contribute its global expertise in fuel cell technology, while Ohmium will bring its electrolyser capabilities to investigate the potential of self-contained water-to-hydrogen-to-electricity systems for applications other than mobility, such as domestic gensets and hard-to-abate industrial sectors. Hence, statement 2 is correct.
A hydrogen-based microgrid generates hydrogen from water via electrolysis, which is either stored or fed into a fuel cell to create electricity on demand. Hence, statement 1 is correct.
Toyota’s first-of-its-kind collaboration with Ohmium will allow the company to investigate the role of hydrogen in developing a broader energy ecosystem, not just for transportation, but also for decentralised, off-grid power generation.
QUESTION 3
The Union Cabinet approved a proposal to set up a regional wing of the Peru-based International Potato Center (CIP), a premier research-for-development organisation with a focus on the potato and sweet potato at:
(a) Lucknow
(b) Hyderabad
(c) Bikaner
(d) Agra
Answer (d)
Explanation:
The Union Cabinet authorised a plan to establish a regional wing of the Peru-based International Potato Centre (CIP), a leading research-for-development agency with a focus on the potato and sweet potato.
The projected CPI-South Asia Regional Centre (CSARC) will be built in Singna, Agra district, and will serve not just farmers in India’s potato belt states such as Uttar Pradesh, Bihar, and West Bengal, but also South Asian countries.
About International Potato Center (CIP)
The CIP, headquartered in Lima, Peru, was created in 1971 to specialise on potato, sweet potato, and Andean roots and tubers. Notably, the potato crop is indigenous to the Peruvian-Bolivian Andes of Latin America and was spread throughout the world by the Spaniards and Portuguese who invaded the area. Potatoes reached India in the 17th century.
The CIP operates across South America, Africa, and Asia. It began operations in India in 1975, when it signed an initial arrangement with the Indian Council of Agricultural Research (ICAR) for potato and sweet potato cooperation.
Read More: International Potato Centre (CIP)
QUESTION 4
With reference to the wilful defaulter, consider the following statements:
A ‘wilful default’ occurs when a borrower fails to complete their repayment commitments to the lender despite having the capacity to do so.
The number of wilful defaulters has decreased from March 2020 to March 2024.
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 (a)
Explanation:
A staggering 2,664 corporates have been classified as wilful defaulters, failing to repay bank loans despite having the means to do so, according to the Reserve Bank of India (RBI).
According to RBI data, the number of wilful defaulters increased from 2,154 in March 2020 to 2,664 in March 2024, while the amount due increased from Rs 1,52,860 crore to Rs 1,96,441 crore over the last four years. Hence, statement 2 is not correct.
These firms have claimed many thousand crores in default and other obligations before the National Company Law Tribunal (NCLT). According to the RBI classification, a ‘wilful default’ occurs when a borrower fails to complete their repayment commitments to the lender despite having the capacity to do so. Hence, statement 1 is correct.
A wilful default happens when the borrower has not utilised the finance from the lender for the specific purpose for which finance was availed of, and has diverted the funds for other purposes, or siphoned off funds, or disposed of or removed the movable fixed assets or immovable property given for the purpose of securing a term loan without the knowledge of the bank.
QUESTION 5
Consider the following statements about opinion trading:
India has a law which can directly deal with opinion trading.
The platform providing opinion trading allows users to wager on the outcome of future events.
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 (b)
Explanation:
Opinion trading services allow users to wager on the fate of future events. The business is expanding rapidly, attracting money and an estimated 5 crore users, but it appears to have mostly flown under the radar in India, unregulated. Hence, statement 2 is correct.
Opinion trading systems look to be betting platforms, and some in government share this perspective. However, investors and creators say that making money on these platforms requires a significant amount of skill.
India’s sector includes companies such as Gurugram-based Probo and MPL Opinio. The former asks questions about a wide range of topics, including sports, elections, and cryptocurrency, whereas the latter exclusively asks about cricket matches.
India currently lacks a law that can deal directly with opinion trading platforms such as Probo and MPL Opinio – however, in foreign markets such as the United States and Australia, where this industry is more mature, governments have decided to treat wagers as securities, putting the responsibility for regulation on the stock market regulator. Hence, statement 1 is not correct.
In India, the primary legal lens through which internet games are viewed is whether they are games of chance or skill. In games of chance, no one can have a competitive advantage over another because the outcome is entirely dependent on luck. However, in skill games, considerable preparation may be necessary to put someone in a better position to make a forecast.
QUESTION 6
Consider the following statements:
India’s own (domestically formulated) poverty line in 2009, before the Tendulkar recommendation, was Rs 17 a day per person for urban areas and Rs 12 a day per person for rural areas.
In 2009, Tendulkar raised the poverty line to Rs 29 per day per person in urban areas and Rs 22 per day per person in rural areas, and later to Rs 36 and Rs 30, respectively, in 2011-12.
In 2014, Rangarajan recommended raising the domestic poverty line to Rs 47 per person per day in urban areas and Rs 33 in rural areas.
Which of the above given statements is/are true?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer (d)
Explanation:
Historically, India had been a leader in poverty estimation and India’s poverty line methodology and data collection influenced the rest of the world in how to study poverty.
However, India’s last officially recognised poverty line was in 2011-12. It was built on a 2009 formula suggested by a committee led by noted Delhi School economist Suresh Tendulkar. Since then, there has been no update on the method.
In 2014, a committee led by former RBI Governor C Rangarajan was commissioned to provide a new method, but this recommendation was never officially accepted.
Since then, thanks to gaps and changes in relevant data collection, India has increasingly used either the Niti Aayog multidimensional poverty index (which is fundamentally different in how it measures poverty) or relied on the World Bank’s poverty line.
What were India’s domestic poverty lines in the past?
India’s own (domestically formulated) poverty line in 2009, before the Tendulkar recommendation, was Rs 17 a day per person for urban areas and Rs 12 a day per person for rural areas.
In 2009, Tendulkar raised the poverty line to Rs 29 per day per person in urban areas and Rs 22 per day per person in rural areas, and later to Rs 36 and Rs 30, respectively, in 2011-12.
In 2014, Rangarajan recommended raising the domestic poverty line to Rs 47 per person per day in urban areas and Rs 33 in rural areas.
QUESTION 7
Which of the following documents is a certificate of Tax Deducted at Source (TDS) issued by an employer to a salaried employee to help with accurate filing of Income Tax Returns (ITR)?
(a) Form 15G
(b) Form 16
(c) Form 26AS
(d) Form 10E
Answer (b)
Explanation:
Tax filing season begins for the financial year 2024-25, and the assessment year 2025-26 has officially commenced, with salaried employees in India having received their Form 16 documentation.
There are new changes in Form 16 that have been announced in the Union Budget 2025 to improve transparency by giving a detailed explanation of compensation components, tax-exempt allowances, and deductions, as well as which salary perks are subject to taxation.
What is Form 16?
Form 16 is a TDS (Tax Deducted at Source) certificate provided by employers to salaried employees, allowing them to accurately submit their Income Tax Returns (ITR) and comply with tax requirements.
QUESTION 8
With reference to GENIUS Act, consider the following statements:
The passing of the bill signifies a major shift in the European Union’s approach to digital assets.
This bill aims to regulate stable coins.
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 (b)
Explanation:
The US Senate passed the GENIUS Act Bill on Wednesday with a vote of 68-30 in a major boost for stablecoins — reserve-backed cryptocurrencies that have received an impetus from the Donald Trump administration in America.
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