Daily Prelims MCQs - Economy - 8th October 2025
- TPP
- Oct 8
- 5 min read
Welcome to your Daily UPSC Prelims Current Affairs MCQs – 8th October 2025. This is part of our subject-wise daily series where Wednesday is dedicated to Economy—strengthening conceptual clarity and application through dynamic, exam-oriented practice that integrates fiscal, monetary, and developmental aspects.
Key topics include the External Commercial Borrowings (ECBs) framework under FEMA and RBI’s role in external financing, the distinction between Nominal and Real GDP, and the Rangarajan Committee’s poverty measurement methodology. You’ll also cover governance-linked economic initiatives like the Pradhan Mantri Awas Yojana–Grameen (PMAY-G) and the digital monitoring tools AwaasSoft and Awaas App.Core monetary concepts such as the Repo Rate and RBI’s Liquidity Adjustment Facility (LAF) are reinforced through recent monetary policy updates.
Regular practice of these economy-based MCQs will refine your analytical precision, boost concept recall, and enhance your ability to interlink static macroeconomics with current fiscal and policy developments—an essential edge for UPSC Prelims 2026.
Click Here to read the Monthly Current Affairs Pointers (CAP).
QUESTION 1
With reference to the External Commercial Borrowings (ECBs), consider the following statements:
These are commercial loans raised by eligible Indian entities from recognised non-resident lenders.
It is governed by the various respective banks.
ECBs are covered under the Foreign Exchange Management Act (FEMA).
How many of the statements given above are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Answer (b)
Explanation:
The RBI unveiled plans to streamline and simplify regulations for External Commercial Borrowings (ECBs). The updated framework will expand the pool of eligible borrowers and recognised lenders, rationalise borrowing limits and maturity norms, eliminate restrictions on borrowing costs, relax end-use constraints, and simplify reporting requirements.
External Commercial Borrowings (ECBs) are commercial loans made by qualifying Indian firms to recognised non-resident lenders, which are controlled by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA). Hence, statements 1 and 3 are correct and statement 2 is not correct.
They provide a substantial funding source for capital development and modernisation, with recent data indicating that total outstanding ECBs will be around $190.4 billion as of September 2024, mostly for infrastructure and industrial projects.
QUESTION 2
With reference to the nominal GDP, consider the following statements:
It measures an economy’s output after adjusting for inflation.
Tax collections are benchmarked to nominal GDP.
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:
Nominal GDP measures an economy’s output at current market prices, while Real GDP measures it after adjusting for inflation. Hence, statement 1 is not correct.
Nominal GDP is the main benchmark for almost all the key economic variables in the country. For instance, tax collections are benchmarked to nominal GDP, as is the country’s overall debt, the government’s gross fiscal deficit or even the total market capitalisation of listed companies. Hence, statement 2 is correct.
QUESTION 3
The Rangarajan committee was formed to:
(a) recommend reforms in the financial sector and banking regulation.
(b) review the methodology for measurement of poverty in the country.
(c) draft the framework for the implementation of the Goods and Services Tax (GST).
(d) suggest measures for restructuring public sector enterprises.
Answer (b)
Explanation:
Almost 15 years ago, the erstwhile Planning Commission set up a committee headed by C Rangarajan, a former governor of the Reserve Bank of India (RBI), to review the methodology for measurement of poverty in the country.
The committee, which submitted its report in June 2014, caused a stir when it estimated the national poverty line at Rs 1,407 in terms of monthly per capita expenditure for urban areas and Rs 972 for rural areas.
QUESTION 4
With reference to the Pradhan Mantri Awas Yojana (Grameen) (PMAY-G), consider the following statements:
The funding for PMAY-G is fully funded by the Central Government.
In PMAY-G, programme implementation and monitoring is to be carried out through an end to end e-Governance model- Using AwaasSoft and Awaas App.
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:
After Durga Puja, the West Bengal government will implement the second phase of the flagship “Banglar Bari” project in which 16 lakh families will be given Rs 1.20 lakh each to build pucca houses.
About PMAY-G
The funding for PMAY-G, at Rs 1.2 lakh per unit, is shared by the Centre and states at a 60:40 ratio (with the exception of Northeastern and Himalayan states, where the Centre bears 90% of the cost, and Union Territories, where the Centre bears all of the cost). Hence, statement 1 is not correct.
In PMAY-G, programme implementation and monitoring is to be carried out through an end to end e-Governance model- Using AwaasSoft and Awaas App. Hence, statement 2 is correct.
QUESTION 5
The Repo Rate is the
(a) interest rate at which the Reserve Bank of India (RBI) loans money to commercial banks.
(b) interest rate at which commercial banks lend money to the RBI.
(c) interest rate charged by commercial banks on loans to the public.
(d) interest rate at which RBI accepts fixed deposits from the public.
Answer (a)
Explanation:
The Reserve Bank of India (RBI) Monetary Policy Committee met from September 29 to October 1, and is widely expected to keep the repo rate unchanged for the second consecutive time amid strong GDP growth and expectations of benign inflation.
A section of economists, however, see a possibility of a repo rate cut in the upcoming policy. The six-member rate-setting panel is unlikely to alter its present ‘neutral’ monetary policy stance.
The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) loans money to commercial banks. More specifically, it is the interest rate at which the Reserve Bank provides liquidity under the liquidity adjustment facility (LAF) to all LAF participants against the collateral of government and other approved securities.
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Nice Questions