[T25] UPSC Mock Round#28: Economy Practice Questions (Mrunal)

Pill2: Budget, Taxation, Public Finance

Q1. The Fourteenth Finance Commission assigned different weight to the following parameters for distribution of tax proceeds to the States : (UPSC’s-CDS-ii-2018)

  1. Income distance
  2. Population
  3. Demographic changes
  4. Area

Arrange the aforesaid parameters in descending order in terms of their weights

  1. 1-2-3-4
  2. 1-2-4-3
  3. 1-3-2-4
  4. 4-3-2-1

HINT: 14th FC YV Reddy: the horizontal formula for tax distribution is- Population Census 1971 (17%), Demo.Change Census 2011 (10%), Income-Distance (50%), Area (15%), Forest-Cover (8%). You can learn more about the background theory of Finance Commissions, in my lecture here.

Q2. Which one of the following is correct about ‘Aaykar Setu’? (UPSC’s-CDS-ii-2018)

  1. It is a mechanism for achieving excellence in public sector delivery related to GST
  2. With the use of a mobile app, it facilitates online payment of taxes
  3. It is communication strategy designed to collect information and build a database of tax defaulters
  4. It enables electronic filing and processing of import and export declarations

HINT: Aaykar means income tax, so it can’t be GST (option 1) or import-export (option 4) which are associated with indirect tax. “Setu” is the Sanskrit word for “Bridge” in a positive sense, so it can’t be about “Tax defaulters”. And yes, it’s an app

Q3. Who among the following is the Convener of the ‘Task Force’ set up in November 2017 by the Government of India to review the Income tax Act and draft a new direct tax law? (UPSC’s-CDS-ii-2018)

  1. Girish Ahuja
  2. Mukesh Patel
  3. Arbind Modi
  4. Mansi Kedia

HINT: During the Rajaswa Gyan Sangam held on 1st and 2nd September, 2017, the Prime Minister Shri Narendra Modi had observed that the Income-tax Act, 1961 (the Act) was drafted more than 50 years ago and it needs to be re-drafted. So, Finance Ministry setup a task force with Arbind Modi as convener, he’s a member of the CBDT.

Q4. In 2018-Nov, NAA imposed penalty on McDonald’s franchisee. Find correct statement(s) about the NAA?

  1. “NAA” stands for National Authority on Anti-profiteering.
  2. Chairman of the Central Board of Excise & Customs (CBEC) is the ex-officio chairman of NAA.
  3. Penalty levied by NAA is transferred to GST compensation fund for states.

Answer Codes:

  1. Only 1 and 2
  2. Only 2 and 3
  3. Only 1 and 3
  4. None of them

HINT: National Anti-profiteering Authority (NAA) is setup to take action against businessmen who’re not passing on goods and services tax (GST) rate cut benefits to customers. It can impose penalty, which goes to Consumer welfare Fund as per the Central GST Act. GST compensation fund is separate thing- which is filled by imposing special compensation cess on coal, demerit and luxury goods such as tobacco, cigar, pan masala, Aerated drinks and motor vehicles.

Q5. According to the latest Reserve Bank of India study on State finances, capital spending is maximum on (UPSC’s-CDS-ii-2018)

  1. rural development
  2. water supply and sanitation
  3. urban development
  4. education

HINT: The report was published in 2018-July and announced in both Hindu and Indian Express but neither dissected above information, and even if they had, who has time to memorize all these things. However, you could make logical guess that Budget-2018 was “Rural-India centric” keeping in mind the 2019’s General Elections, so state Governments too ought to have made similar strategies by focusing more on rural area. Anyways, crosscheck numbers from original report

For the year 2018-19, the States’ capital expenditure on Rs. billion is as following

  • Rural development: 425.9
  • Education, Sports, Art, Culture: 208
  • Water supply and sanitation: 359
  • Urban development: 250

Q6. Statement I : The overall fiscal deficit of the States in India during 2017-2018 stayed above the FRBM threshold level of 3 percent for the third successive year. Statement-II: Special Category States had run up a higher level of fiscal deficit in 2017-2018 compared to 2016-2017 (UPSC’s-CDS-ii-2018)

  1. Both the statements are individually true and Statement II is the correct explanation of Statement I
  2. Both the statements are individually true but Statement II is not the correct explanation of Statement I
  3. Statement I is true but Statement II is false
  4. Statement I is false but Statement II is true

HINT: Another question lifted from RBI’s State Finances Report published in 2018-July.

  • Fiscal deficit of all states combined was 3.1% in 2017. And in previous 2 years also it was above 3%. So yes, first statement is right.
  • Special Category states had 3.0% FD in 2016, and 6.6% in 2017.
  • Non-special category states: FD 2.9% in 2017. So that means Sp.Cat states’s higher FD responsible for crossing the 3% limit overall.

Q7. The two defence industrial corridors announced by the Finance Minister in his 2018 Budget speech are coming up in which of the following States? (UPSC’s-CDS-ii-2018)

  1. Odisha and West Bengal
  2. Punjab and Haryana
  3. Gujarat and Maharashtra
  4. Uttar Pradesh and Tamilnadu

HINT: The 2018-Feb’s budget speech itself doesn’t mention which states exactly. But later it was revealed that Tamilnadu and Uttar Pradesh will get these corridors.

Pill3: Intl. Trade, World Bank

Q8. As per the extant policy, Foreign Direct Investment is permitted in the defence sector under the automatic route up to which one of the following limits? (UPSC’s-CDS-ii-2018)

  1. 26 percent
  2. 74 percent
  3. 51 percent
  4. 49 percent

HINT: While the Draft defence production policy aims to raise FDI cap to 74% but as per the extant (i.e. present) FDI policy, permits only upto 49% FDI in defense sector through automatic route.

Q9. The tagline ‘Invaluable Treasures of Incredible India’ is associated with the logo for (UPSC’s-CDS-ii-2018)

  1. Archeological Survey of India
  2. India Tourism Development Corporation
  3. Geological Survey of India
  4. Geographical Indications (GI) of India

HINT: 2018-Aug, Dept of Industry and policy promotion launched this logo for GI products, to make them more attractive. GI indicator examples- Basmati rice, Banarasi Sari, Kashmir’s Pashmina shawls W.Bengal’s Darjeeling Tea etc.

Q10. In 2018-Nov, Asia-Pacific Economic Cooperation (APEC) summit was held. Find correct statement(s) about it:

  1. Venue was in Papua New Guinea.
  2. Summit concluded without any joint statement from the leaders.
  3. India did not participate in this summit.

Answer Codes:

  1. Only 1
  2. Only 1 and 2
  3. Only 2 and 3
  4. None of them

HINT: It was held in Papa’s capital Port Moresby. Ended without any joint statement just like WTO’s Buenos Aires summit 2017. India not an APEC member, so how can it attend!?

SummitVenueTheme / Significance
SCO2017-Kazakhstan’s AstanaIndia, Pak got formal membership
BIMSTEC2014- Not imp. (Myanmar)Towards a peaceful, prosperous and sustainable Bay of Bengal region
2018- Kathmandu, Nepal
BRICS2018- Johannesburg, S.Africa“BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution”
2019- Brazil
CHOGM2015- Not imp; 2018- UKCommonwealth
UNFCCC2017-Bonn, GermanyClimate Change
2018- Katowice, Poland
PBD2017- Bengaluru (7-9 Jan)(2019) Role of Indian Diaspora in Building New India
2019- Varanasi (21-23 Jan)
WTO2017- Buenos Aires, 2019- ?
ASEAN2018: Singapore, 19- Thailand
APEC2018-Papua, 2019-Chile

Pill4: Sectors- Agriculture

Q11. Which one of the following was not a part of the strategies followed by the Government of India to increase food grain production in India immediately after independence? (UPSC’s-CDS-ii-2018)

  1. Intensification of cropping over already cultivated land
  2. Increasing cultivable area by bringing cultivable and follow land under plough
  3. Using high-yielding varieties (HYV) seeds
  4. Switching over from cash crops to food crops

HINT: Debatable question depending on how you interpret “immediately after independence”. Because according to NCERT Economy Class11, the HVY seeds started from mid 1960s. I don’t see 1965 as ‘immediately after independence’.

Q12. Statement I : Agriculture in India still accounts for a substantial share in total employment. Statement II : There has been no decline in volatility of agriculture growth in India. (UPSC’s-CDS-ii-2018)

  1. Both the statements are true and II explains I
  2. Both the statements are true but II doesn’t explain I
  3. Statement I is true but Statement II is false
  4. Statement I is false but Statement II is true

HINT: Let’s rephrase second statement: “Agriculture growth rate continues to be volatile.” Now let’s check from Economic Survey 2018 Vol2, Ch7: Growth rate in GVA of Agriculture & Allied Sectors: 1.5% in 2012, 5.6% in 2013, -0.2% in 2014, 0.7% in 2015, 4.9% in 2016, 2.1% in 2017. So, yes the volatility is there, and it has not declined. Second statement is right. But does it explain the first correct statement?

Q13. With regard to the cabinet decision in July 2018, the percentage increase in Minimum Support Price (MSP) is maximum in which one of the following crops? (UPSC’s-CDS-ii-2018)

  1. Jowar (Hybrid) ~43%
  2. Bajra ~37%
  3. Maize ~19%
  4. Soya bean 11%

HINT: Who prepares in this much detail. I’ve already mentioned the hike in the options itself. Madhya Pradesh is prominent in Soya bean cultivation and election is approaching so if you guessed that Government must have given very large hike in Soya MSP for farmers vote bank… well you’re mistaken.

Q14. According to the World Bank’s Doing Business Report, 2019, India’s ranking has improved in in which of the following areas compared to previous year? (inspired from UPSC’s-CDS-ii-2018)

  1. Paying taxes
  2. Resolving insolvency
  3. Starting a business
  4. Construction Permits

Select the correct answer using the code given below:

  1. 1 only
  2. 1 and 2 only
  3. only 3 and 4
  4. All four areas.

HINT: UPSC examiner knows that all serious candidates have mugged up that India secured 77th rank and New Zealand secured first rank and Somalia secured the bottomest 190th rank in World Bank’s EoD report. So, as a token of sadism, he has asked for individual components. If you try to guess that GST must have improved the #1 and Insolvency-Bankruptcy code must have improved #2 then you’re sadly mistaken. Ref: Biz Standard

  • Paying taxes: rank dropped from 119 to 121
  • Resolving insolvency: rank dropped from 103 to 108
  • Starting a business: rank improved from 156 to 137
  • Getting construction permits: rank improved from 181 to 52.
रट्टा मारो जिंदाबाद : Long live the Rote-Learning
LATEST Report1st  RankIndiaLast Rank
World Bank’s EoD 2019NZ100-> 77 J190th Somalia
Global Hunger Index 2018 by Concern Worldwide (Ireland) and Welthungerhilfe (Germany). IFPRICollectively 15100->103 L119 Central African Republic
Human Dev Report by UNDP 2018Norway131->130 J189 Niger
Gender Gap 2017 by WEFAlbania108144 Yemen
World Happiness Report 2018 by UN Sustainable Development Solutions Network (SDSN)- every 2 yearsFinland122->133 L But Pakistan is the happiest among SAARC countries !!??156: Burundi
World Inequality Index 2018 UK’s OxfamSweden147 L fodder for Essay152 Nigeria

Q15. According to the updated World Bank data for 2017, India is the sixth biggest economy of the world (in terms of GDP). Which one of the following is not ahead of India? (UPSC’s-CDS-ii-2018)

  1. Japan
  2. UK
  3. France
  4. Germany

HINT: Top-10 economies are United States, China, Japan, Germany, United Kingdom, India, France, Brazil, Italy, Canada. Ref: https://data.worldbank.org/indicator/ny.gdp.mktp.cd?year_high_desc=true

Q16. Statement I : Private Investments in research have severely lagged public investments in India. Statement II : Universities play a relatively small role in the research activities of the country. (UPSC’s-CDS-ii-2018)

  1. Both the statements are true and II explains I
  2. Both the statements are true but II doesn’t explain I
  3. Statement I is true but Statement II is false
  4. Statement I is false but Statement II is true

HINT: First statement is lifted verbatim Economic survey 2017-2018 vol1, page 122. Between 2004 to 2016, Public investment in RD has been ~0.4% of GDP whereas private investment has been ~0.2%. so, first statement is right. Second statement also lifted from same page. However, does it explain the first statement? Will private investment increase if universities played active role!!??

Pill4A: Employment, Inflation, Investment

Q17. The natural rate of unemployment hypothesis was advocated by (UPSC’s-CDS-ii-2018)

  1. Milton Friedman
  2. A.W.Philips
  3. J.M.Keynes
  4. R.G.Lipsey

HINT: Philip Curve says that if inflation increases then unemployment will decline and vice versa. But, it was the Nobel winner Milton Friedman who introduced the concept of “the natural rate of unemployment” i.e. the minimum rate of unemployment that will prevent inflation from increasing. Ref: Britannica

Q18. Statement I : There has been a sharp decline in savings rate in Indian economy between 2007 – 2008 to 2015-2016. Statement II : There has been a fall in household and public savings. (UPSC’s-CDS-ii-2018)

  1. Both the statements are true and II explains I
  2. Both the statements are true but II doesn’t explain I
  3. Statement I is true but Statement II is false
  4. Statement I is false but Statement II is true

HINT: Lifted verbatim Economic survey 2017-2018 vol1, page 44’s table. In the given timeframe (2007 to 2015), Total savings rate declined by -7.7%, household saving by -5.2% and public savings by -4.0%. So think, whether 2 explains 1? What is the meaning of Savings Rate, Investment Rate and Capital Formation- you can learn it in my video lecture here.

Pill5: Infrastructure- Transport / Railways

Q19. The headquarters of Metro Railway Zone is located in (UPSC’s-CDS-ii-2018)

  1. New Delhi
  2. Mumbai
  3. Kolkata
  4. Chennai

HINT: “New Delhi has metro so it ought to be the Metro Railway Zone” such guessmasters should buy Iodex for their broken backs because IYB Ch.26 on Transport gives a list of 17 Railway zonal HQs. Kolkata is Zonal Railway HQ for Eastern, South Eastern and Metro.

Q20. Under the PRASAD Tourism Scheme, which one of the following has not been identified as a religious site for development? (UPSC’s-CDS-ii-2018)

  1. Ajmer (Rajasthan)
  2. Hardwar (Uttarkhand)
  3. Somnath (Gujarat)
  4. Velankanni (Tamil Nadu)

HINT: IYB ch.5 says Under PRASAD scheme, 25 sites of religious significance have been identified for development namely Amaravati (Andhra Pradesh), Amritsar (Punjab), Ajmer (Rajasthan), Ayodhya (Uttar Pradesh), Badrinath (Uttarakhand), Dwarka (Gujarat), Deoghar (Jharkhand), Belur (West Bengal), Gaya (Bihar) , Guruvayoor (Kerala), Hazratbal (Jammu & Kashmir), Kamakhya (Assam), Kanchipuram (Tamil Nadu), Katra (Jammu & Kashmir), Kedarnath (Uttarakhand), Mathura (Uttar Pradesh), Patna (Bihar), Puri (Odisha), Srisailam (Andhra Pradesh), Somnath (Gujarat), Tirupati (Andhra Pradesh), Trimbakeshwar (Maharashtra), Ujjain (Madhya Pradesh), Varanasi (Uttar Pradesh) and Vellankani (Tamil Nadu). So, eliminate accordingly.

Pill6: HRD, Census Figures

In UPSC’s-CDS-ii-2018, UPSC mostly focused on “data interpretation’ related MCQs from economy. This is continuation of the trend observed in CSE-2018 Prelim as well.

Q21. SWAYAM is (UPSC’s-CDS-ii-2018)

  1. a network that aims to tap the talent pool of scientists and entrepreneurs towards global excellence
  2. a Massive Open Online Courses (MOOCs) initiative on a national platform
  3. an empowerment scheme for advancing the participation of girls in education
  4. a scheme that supports differently abled children to pursue technical education

HINT: In 2014, HRD Ministry launched Study Webs of Active-Learning for Young Aspiring Minds (SWAYAM). So, think which term fits? Here is a list of similar noted Government schemes for higher education in my lecture.

रट्टा मारो जिंदाबाद : Long live the Rote-Learning
Notable SchemeFeature
SAKSHAMAICTE Scholarship for Differently-Abled Children
Sugamya Pustakalaya:Soc.Jus. Ministry’s digital library for VH
SAMVAY framework-HRD’s Skill assessment matrix for vocational advancement of youth- course credit for mobility
SwayamHRD’s Study Webs of Active -Learning for Young Aspiring Minds: Massive Open Online learning portal
ShaGun PortalHRD’s Monitoring School performance in SSA
Prashikshak PortalHRD’s Monitoring Teachers training institutes
GIANHRD’s Global Initiative for Academy Network to tap the talent pool of scientists and entrepreneurs (option A)
VajraVisiting Advanced Joint Research: DST scheme for bringing  NRI faculty
PragatiAICTE scholarship for girls in technical education
KIRANDST scheme for helping women scientist resume work after break
VidhyanjaliHRD’s Private people volunteer in SSA

Q22. Which one of the following is the correct ascending sequence of States with regard to percentage of urban population (2011)? (UPSC’s-CDS-ii-2018)

  1. Tamil Nadu – Mizoram – Goa – Maharashtra
  2. Goa – Mizoram – Maharashtra – Kerala
  3. Maharashtra – Kerala – Mizoram – Goa
  4. Mizoram – Goa – Maharashtra – Kerala


If you try guessing here that Mizoram is a North East state so it could be lowest in urbanization and then you could jump to answer 4 then you’re in for serious shock. Let’s find the official state-wise urban population data from Census-2011. IYB has not given it. While NCERT India-People and Economy has appendix containing urban population table, but it’s outdated data of Census-2001, even in the latest edition. Time to look into Majid Hussain’s Geography of India page 14.31.

  • Maharashtra: 45.23%
  • Kerala: 47.72%
  • Tamilnadu: 48.45%
  • Mizoram: 51.51%
  • Goa: 62.17%

Q23. Which one of the following is the correct ascending sequence of States in terms of their population density as per Census 2011? (UPSC’s-CDS-ii-2018)

  1. Arunachal Pradesh – Sikkim – Mizoram – Himachal Pradesh
  2. Arunachal Pradesh – Mizoram – Sikkim – Himachal Pradesh
  3. Mizoram – Arunachal Pradesh – Himachal Pradesh – Sikkim
  4. Arunachal Pradesh – Himachal Pradesh – Sikkim – Mizoram


Number of people living in per square km area is called Population Density. Arunanchal Pradesh has lowest population density. This is given in NCERT Geography and all GK books. So, correct answer could be 1, 2 or 4. And within them, Himachal could have more density than North Eastern States- if we go by that logic then Answer could be 1 or 2. It’s unlikely that you know the exact population density of Sikkim Vs Mizoram so, you could do guess-mastergiri and pick either one from 50:50 coin toss or just skip this question. You could further guess that Sikkim is the ‘first organic farming state of India’, so they could have more thriving economy compared to Mizoram, and hence attracting more migrants, then it’d have more population density than Mizoram. Anyways, Let’s crosscheck the exact numbers from IYB-2017 Table 1.4 in chapter1, because in IYB2018 they’ve removed such census tables (atleast in the Kindle Edition).

  • Arunanchal Pradesh 17 people per sq.km
  • Mizoram 52 people per sq.km
  • Sikkim 86 people per sq.km
  • Himachal 123 people per sq.km

Q24. The rate of population growth during 2001 – 2011 decade declined over the previous decade (1991 – 2001) in all of the following States , except (UPSC’s-CDS-ii-2018)

  1. Tamil Nadu
  2. Kerala
  3. Goa
  4. Andhra Pradesh

HINT: Economic Survey 2016-17 had mentioned that Total Fertility Rate is declining in the coastal states, hence they’ll have to rely on migrants from interior states in the future decades when their own population starts to grow old. But, here all four are costal states so it doesn’t help making any logical eliminations. At most you could go by gut feeling that Kerala and Goa are not ‘migrant-attracting big states’ so, unlikely they could have absorbed new families who produced more kids. So, answer could be Andhra Pradesh or Tamilnadu. So, we’ve to find the exact numbers from IYB-2017 Table 1.1 in chapter1, because in IYB2018 they’ve removed such Census tables (atleast in the Kindle Edition).

  • Goa declined from 15.21% to 8.07%
  • Andhra Pradesh declined from 14.59 to 11.10
  • Kerala declined from 9.43% to 4.85%
  • Tamilnadu increased 11.72% to 15.60%

PS: you don’t have to buy IYB17, just go here on this link and click on book cover’s“look inside”, ch1 is given in the free preview!

Q25. As per Census 2011, the concentration of Scheduled Caste population (going by percentage of Scheduled Caste population to total population of the State) is the highest in the State of (UPSC’s-CDS-ii-2018)

  1. Uttar Pradesh
  2. Himachal Pradesh
  3. Punjab
  4. West Bengal

HINT: You can make logical guesses about the composition by looking at the socio-political undercurrents. For example, W.Bengal parties is more keen to please the Muslims so they could have a sizable percentage. Uttar Pradesh is stronghold of BSP but in Punjab, the ‘Dera culture’ is more prominent because of sizable schedule castes. So, it has to be either UP or Punjab, but since UP has very large total population than Punjab toh UP mein SC % down ho jaayegaa. Therefore, Punjab should be the answer. Let’s find the exact numbers from IYB-2017 Table 1.13 in chapter1, because in IYB2018 they’ve removed such census tables (atleast in the Kindle Edition).

  • UP: 20.7% SC and 0.6% ST
  • W.Bengal: 23.5% SC and 5.8% ST
  • Himachal: 25.2% SC and 5.7% ST [So, guessmaster-giri that UP could have higher % of SC population than W.Bengal or Himachal is WRONG]
  • Punjab: 31.9% SC and 0% ST. [ST status is state-specific, so, Punjab would have migrant ST but not ‘state ST’.]

Conclusion, Afterthoughts, Epilogue

  1. Economic survey must be prepared, even in UPSC’s CDS exam two verbatim Qs were asked (savings-investment, scientific research)
  2. IYB is useful. But excessive affection avoid.
  3. CDS-2018: Few questions could be solved from IYB17 but not given IYB18= “old NCERT type affection” avoid.
  4. Data driven ascending / descending MCQs either 50:50 or skip, not “mugup everything under the Sun”. Don’t spend 90% of time on 10% of unsolvable MCQs.
  5. Topper’s Tickmaster strategy: limited charms only for those ‘large reading” and “large practice”. We’ll practice more, in upcoming videos, for other subjects of GS.

24 questions in Prelims 2018 came from Xaam’s Prelims test series.And the truth speaks for itself .When one of the most reputed institution(ShankarIAS) claims for only 27 questions,we can proudly say that we achieved what we promised that too within limited resources, keeping the cost to minimum possible. It is time to buckle up for 2019 Prelims.

Join Our Prelims 2019 Online test Series https://imojo.in/Prelims2019TestSeries

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