Q1. With reference to recent economic trends in India (2025-26), consider the following statements:
- India remained the fastest-growing major economy despite global slowdowns.
- Retail inflation reached a historic low due to food price deflation.
- The share of renewable energy in the energy mix exceeded 40% by 2025.
How many of the statements given above are correct?
A. Only One
B. Only Two
C. Only Three
D. None
Correct Answer: B
Explanation:
- Statement 1 – Correct: India has consistently been positioned as the fastest-growing major economy in 2025-26 amid global headwinds (e.g., US tariffs, trade uncertainties). Official advance estimates pegged FY 2025-26 GDP growth at ~7.4% (higher than previous FY’s 6.5%). Reports from Deloitte, CNBC, IMF (raised to 7.3%), and UN projections highlight 6.6-7.8% growth in FY26, driven by resilient domestic demand, private consumption, investment, and rural recovery. Multiple sources (Economic Survey 2025-26, World Bank-aligned views) reaffirm India outperforming peers like China, US, and EU amid global slowdowns.
- Statement 2 – Correct: Retail CPI inflation hit a historic low of 0.25% in October 2025 (lowest in the current CPI series since 2012), largely due to sharp food price deflation (-5.02% YoY in food, vegetables down ~27.57%). This was aided by GST rate cuts, favorable base effects, and good harvests. Inflation later rose modestly (e.g., ~1.66% in Dec 2025 projections), but the October low qualifies as historic, with food deflation as the primary driver (MOSPI data, Reuters, The Hindu reports).
- Statement 3 – Incorrect: The share of renewable energy (including large hydro) in total installed electricity capacity reached ~51.5% by late 2025 (non-fossil ~51.55%, per MoP/PIB), but this refers to capacity, not the energy mix (actual generation share). In generation mix, renewables (including hydro) hovered around 25-30% in 2025 (e.g., ~25% average in H1 2025, peaks at 31% in some months per Ember/IEA). It did not exceed 40% in the overall energy/generation mix by end-2025; progress is strong toward the 500 GW non-fossil capacity target by 2030, but generation share lags due to intermittency and coal dominance (~70%). The question specifies “energy mix” (generation), so incorrect.
Q2. Which of the following best describes ‘Green Hydrogen’ in India’s policy framework?
A. Hydrogen produced from natural gas reforming
B. Hydrogen produced using renewable energy electrolysis
C. Hydrogen blended with natural gas for transport
D. Hydrogen from coal gasification
Correct Answer: B
Explanation:
Under the National Green Hydrogen Mission (approved 2023, ongoing in 2025-26), Green Hydrogen is defined as hydrogen produced via electrolysis using renewable energy sources (solar, wind, etc.), with well-to-gate emissions ≤ 2 kg CO₂ eq/kg H₂ (MNRE standard). This excludes grey hydrogen (from natural gas reforming, high emissions), blue (with CCS), or brown/black (coal gasification). The mission targets 5 MMT annual production by 2030, focusing on electrolysis-powered green hydrogen to decarbonize hard-to-abate sectors (steel, fertilizers, transport) and position India as a global hub. Option C describes blending (end-use), not production; A and D are fossil-based (not green). The policy explicitly emphasizes renewables-based electrolysis for zero/low-carbon hydrogen.
Q3. Consider the following statements regarding Fiscal Developments in 2025:
- Sovereign credit rating upgrades occurred multiple times.
- Capital expenditure focused on infrastructure amid fiscal consolidation.
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
Correct Answer: C
Explanation:
- Statement 1 – Correct: India saw multiple sovereign credit rating upgrades in 2025, enhancing fiscal credibility. Key ones include S&P upgrading from BBB- to BBB (first in nearly two decades, Aug 2025), Morningstar DBRS to BBB (Stable), and R&I. These reflect prudent fiscal management, strong growth, low inflation, and buffers (Economic Survey 2025-26 highlights three upgrades). This lowered borrowing costs and boosted confidence.
- Statement 2 – Correct: Amid fiscal consolidation (deficit reduction path), capital expenditure (Capex) remained prioritized on infrastructure (roads, railways, urban development) to support growth. FY26 saw sustained high Capex despite prudence, balancing consolidation with investment-led recovery (resilient demand, public investment as growth driver per Economic Survey/PIB). This “growth-friendly consolidation” approach continued.
Q4. Match List I (Economic Term) with List II (Description):
List I
A. Disinvestment
B. Fiscal Drag
C. Twin Deficit
D. Stagflation
List II
- High inflation + stagnation
- Budget deficit + current account deficit
- Sale of government equity in PSUs
- Automatic rise in tax revenue due to inflation
Select the correct answer.
A. A-3, B-4, C-2, D-1
B. A-4, B-3, C-1, D-2
C. A-3, B-1, C-4, D-2
D. A-2, B-4, C-3, D-1
Correct Answer: A
Explanation:
- A-3: Disinvestment → Sale of government equity in Public Sector Undertakings (PSUs) to raise funds, reduce fiscal burden, and promote efficiency (e.g., strategic sales).
- B-4: Fiscal Drag → Automatic rise in tax revenue due to inflation (bracket creep pushes incomes into higher tax slabs without policy change, acting as a drag on growth).
- C-2: Twin Deficit → Simultaneous high budget/fiscal deficit + current account deficit (India often faces this, though narrowing in recent years).
- D-1: Stagflation → High inflation combined with economic stagnation/low growth + high unemployment (policy dilemma, e.g., 1970s global example). This is a standard conceptual matching; no current affairs twist here.
Q5. Which of the following is a key target under India’s ethanol blending programme by 2025-26?
A. 10% blending
B. 20% blending
C. 30% blending
D. 5% blending
Correct Answer: B
Explanation:
The Ethanol Blended Petrol (EBP) Programme targets 20% ethanol blending (E20) in petrol by 2025 (advanced from original 2030 target). India achieved this milestone in 2025, five years ahead (e.g., average ~19.24% in ESY 2024-25, crossed 20% in phases per Minister Hardeep Singh Puri, MoPNG). Blending rose from ~1.5% in 2014 to 20% in 2025 (13-fold increase), supported by higher sugarcane/grain-based production, distillery expansions, and incentives. This reduces oil imports, supports farmers (remunerative prices for crops), and cuts emissions. 10% was an earlier milestone; 20% is the key 2025-26 target (achieved/in progress as per official statements).
