DAY – 1 : Insta 75 Days Revision Plan-2026 : ECONOMY

Answer: (b)

Explanation

The National Statistical Office (NSO) is the nodal agency in India for the release of crucial macroeconomic data, including the Annual Estimates of National Income, Quarterly GDP data, and the Index of Industrial Production (IIP).

• Ministry: The NSO functions under the Ministry of Statistics and Programme Implementation (MoSPI).
• Formation: It was formed in 2019 by merging the Central Statistics Office (CSO) and the National Sample Survey Office (NSSO). Previously, the CSO was primarily responsible for National Accounts, but the unified NSO now handles these responsibilities.
• The NSO releases the “First Advance Estimates” of GDP usually in January, followed by “Second Advance Estimates” in February, and the “Provisional Estimates” in May. Quarterly data is released at the end of the second month after the end of the quarter.

Key Reports released by NSO

• National Accounts Statistics: Includes GDP, GNI, and Per Capita Income.
• Consumer Price Index (CPI): Used by the RBI for its inflation targeting (Monetary Policy).
• Index of Industrial Production (IIP): Measures the short-term changes in the volume of production of a basket of industrial products.
• Periodic Labour Force Survey (PLFS): Data on employment and unemployment in India.

Answer: (d)

Explanation

Gross Value Added (GVA) is a measure of the value of goods and services produced in an economy. It provides the “supply-side” view of the economy.

Statement 1 is correct: Conceptually, GVA is the value of the final goods and services produced by an enterprise or sector, minus the cost of the inputs (intermediate consumption) used to produce them.

Statement 2 is correct: GVA is particularly useful because it allows for a sector-wise breakdown of the economy. In India, the National Statistical Office (NSO) tracks GVA for eight major sectors, including Agriculture, Manufacturing, and Services, to identify which specific part of the economy is driving growth.

Statement 3 is correct: This follows from the fundamental relationship between GDP and GVA:

If GVA is high but GDP is relatively lower, it indicates that the term (Product Taxes − Product Subsidies) is a large negative number. This situation arises when the government spends significantly more on subsidies than it collects through product taxes.

Answer: (c)

Explanation

National Income Accounting involves several “aggregates” that measure the economic performance of a country from different perspectives (production, income, and expenditure).

• 1 is an aggregate: Personal Disposable Income (PDI) is the income actually available to households for consumption and saving. It is calculated by subtracting personal tax payments (like Income Tax) and non-tax payments (like fines) from Personal Income.
• 2 is an aggregate: Net Domestic Product (NDP) at Market Prices is a measure of the net output of the economy within the domestic territory. It is calculated by subtracting Depreciation (consumption of fixed capital) from the Gross Domestic Product (GDP).
• 3 is an aggregate: Gross National Disposable Income (GNDI) measures the maximum value of goods and services that the residents of a nation can consume or save. It includes the Gross National Product (GNP) plus net current transfers received from the rest of the world (like remittances or gifts).
• 4 is an aggregate: Per Capita Real Income is used to measure the average income of a person in the country adjusted for inflation. It is calculated by dividing the Real National Income (NNP at Factor Cost at base year prices) by the total population. This is considered a key indicator of the standard of living.

Answer: (d)

Explanation

Statement-I is incorrect: Whether GNP is higher than GDP depends entirely on the Net Factor Income from Abroad (NFIA). For a developing nation like India, GNP has historically been lower than GDP. This is because India typically has a negative NFIA—the factor income paid to foreigners (interest on loans, dividends to foreign investors, etc.) is generally higher than the factor income received by Indian residents from abroad.

Statement-II is correct: GNP measures the value of all finished goods and services produced by the citizens of a country, regardless of where they are located. To arrive at this figure, you take the GDP (production within the territory) and add the NFIA (Income earned by residents abroad minus income earned by non-residents within the country).

Value Addition

Key Differences: GDP vs. GNP

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Net Factor Income from Abroad (NFIA) consists of three main components:

• Net compensation of employees: Wages earned by residents working abroad vs. non-residents working in the country.
• Net income from property and entrepreneurship: Rent, interest, and profits/dividends.
• Net retained earnings: Of resident companies located abroad.

Answer: (b)

Explanation

Statement I is correct: The GDP Deflator is considered one of the most comprehensive measures of inflation. While the Consumer Price Index (CPI) and Wholesale Price Index (WPI) track price changes for a selected basket of goods and services, the GDP Deflator captures the price changes of all goods and services produced within the domestic economy.

Statement II is correct and explains Statement I: The CPI and WPI use a fixed basket of goods and services determined in a base year, which may become outdated as consumption patterns evolve. In contrast, the GDP Deflator is a Paasche index, meaning its basket reflects the current year’s production structure. As the economy changes—for example, if production shifts from coal to smartphones—the weights in the GDP Deflator adjust automatically.

Statement III is correct but does NOT explain Statement I: In an open economy like India, the GDP Deflator can be influenced by fluctuations in international crude oil prices, but in an indirect way. Since the GDP Deflator measures the prices of domestically produced goods and services, it does not directly include the price of imported crude oil. However, crude oil is a crucial input in domestic production (transportation, manufacturing, electricity generation, etc.). When global oil prices increase, the cost of producing many goods and services within the economy rises, which can eventually be reflected in the GDP Deflator.

Thus, both Statement II and Statement III are correct but only one of them explains Statement I

Answer: (a)

Explanation

The Gadgil Formula is a cornerstone of Indian fiscal federalism, specifically regarding how the Center assisted States before the current Finance Commission-led era.

• Statement 1 is correct: Named after D.R. Gadgil, then Deputy Chairman of the Planning Commission, the formula was evolved to provide an objective, data-driven basis for allocating Central Assistance for State Plans. Prior to this, the allocation was somewhat arbitrary and lacked a uniform set of criteria.
• Statement 2 is incorrect: The Gadgil Formula was not introduced during the First Five-Year Plan. It was first adopted for the Fourth Five-Year Plan (1969–1974). The First Plan focused heavily on agriculture and irrigation, while the Second Plan (Mahalanobis Model) focused on heavy industries. The Gadgil Formula came much later to address the growing demand from States for a fair share of central resources.

Answer: (d)

Explanation

Public Debt in India includes the total liabilities of the Union Government that are to be settled from the Consolidated Fund of India.

• Statement 1 is correct: India’s public debt profile is characterized by a very high reliance on domestic markets. Internal debt (denominated in Rupees and owed to domestic lenders like banks, insurance companies, and households) typically accounts for over 90-95% of the total public debt. External debt (loans from the World Bank, IMF, or foreign governments) constitutes a very small fraction, which helps insulate the Indian economy from global exchange rate volatility.
• Statement 2 is correct: When the government cannot meet its expenditure through taxes or market borrowings, it can borrow from the Reserve Bank of India (RBI) by issuing special securities. This is known as Monetized Deficit (or “printing money” to fund the deficit). Since the RBI is a domestic entity, this borrowing is classified as a part of the internal debt.
  • It was common in the past through “Ad-hoc Treasury Bills,” it is now strictly regulated and restricted to “Ways and Means Advances” (WMA) to meet temporary mismatches in receipts and payments.
• Statement 3 is correct: The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 was amended based on the N.K. Singh Committee recommendations. It shifted the focus from just the “Fiscal Deficit” to the Debt-to-GDP ratio. The target was set to achieve a debt-to-GDP ratio of 60% for the General Government (40% for the Center and 20% for the States).

Components of Public Debt

Answer: (b)

Explanation

If borrowing is used only for capital investment, it means revenue receipts are sufficient to meet revenue expenditure and interest payments.

1. Fiscal Deficit: Fiscal Deficit = Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts)
   Since borrowing is used to finance capital expenditure, fiscal deficit still exists.
   Hence not zero.
2. Revenue Deficit: Revenue Deficit = Revenue Expenditure − Revenue Receipts
   If borrowing is not used for revenue expenditure, revenue receipts fully cover it.
   Hence Revenue Deficit = 0.
3. Effective Revenue Deficit: Effective Revenue Deficit = Revenue Deficit − Grants for Capital Assets
   Since Revenue Deficit is already zero, Effective Revenue Deficit is also zero.
4. Primary Deficit: Primary Deficit = Fiscal Deficit − Interest Payments
   Fiscal deficit still exists due to borrowing for capital investment, so Primary Deficit ≠ 0.

Therefore, two deficits (Revenue Deficit and Effective Revenue Deficit) become zero.

Answer: (a)

Explanation:
The Strait of Hormuz lies between Oman and Iran and links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond. It is 21 miles (33 km) wide at its narrowest point, with the shipping lane just 2 miles (3 km) wide in either direction.

Importance of Strait of Hormuz

• About a fifth of the world’s total oil consumption passes through the strait.
• OPEC members Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq export most of their crude via the strait, mainly to Asia.
• Qatar, among the world’s biggest liquefied natural gas exporters, sends almost all of its LNG through the strait.
• The UAE and Saudi Arabia have sought to find other routes to bypass the strait. About 2.6 million barrels per day (bpd) of unused capacity from existing UAE and Saudi pipelines could be available to bypass Hormuz, the U.S. Energy Information Administration said in June last year.
• The U.S. Fifth Fleet, based in Bahrain, is tasked with protecting commercial shipping in the area.

Answer: (a)

Explanation:
The Victims of Terrorism Advocacy Network (VoTAN) was launched by the United Nations Office of Counter-Terrorism (UNOCT) following the 2022 UN Global Congress on Victims of Terrorism. It aims to create a global network where victims and survivors can support each other and engage as advocates, educators, and peacebuilders. The initiative has received financial support from Spain.

About United Nations Office of Counter-Terrorism (UNOCT)

Establishment

• Established on 15 June 2017 by UN General Assembly Resolution 71/291.
• Created as part of UN institutional reform under Secretary-General António Guterres.

Headquarters

• United Nations Headquarters, New York.

First Head

• Vladimir Voronkov (Russia) – appointed as the first Under-Secretary-General for Counter-Terrorism.

Mandate and Legal Basis

UNOCT operates under the framework of the:

• UN Global Counter-Terrorism Strategy (2006) – adopted by UNGA Resolution 60/288.
• Strategy is reviewed every two years by the UN General Assembly.

Answer: (a)

Explanation

Option (a) is correct:
The passage suggests that the value of sports lies not merely in individual success or rewards but in its broader contribution to society and collective progress.

Option (b) is incorrect:
The passage does not discuss funding or infrastructure policies related to sports.

Option (c) is incorrect:
Although the passage hints that personal benefits alone are insufficient, it does not claim that sporting achievements benefit only athletes.

Option (d) is incorrect:
The passage does not prescribe how prize money should be used; it focuses on evaluating sports within a wider social perspective.

Answer: (a)

Solution:

Given that,

P, Q and R together can complete the work in 15 days.

So,

P + Q + R = 1/15

Also,

P + Q = 1/30
Q + R = 1/20

We have to find P + R

Now,

(P + Q) + (Q + R) = P + R + 2Q

Using the same method:

(P + Q + R) + Q = (P + Q) + (Q + R)

So,

1/15 + Q = 1/30 + 1/20

Taking LCM = 60,

4/60 + Q = 2/60 + 3/60

4/60 + Q = 5/60

So,

Q = 1/60

Now,

P + R = (P + Q + R) − Q

= 1/15 − 1/60

Taking LCM = 60,

= 4/60 − 1/60 = 3/60 = 1/20

Thus, P and R together can complete the work in 20 days.

Hence, option (a) is correct.

Answer: (b)

Explanation:

P’s 1 minute work = 1/120
Q’s 1 minute work = 1/160
R’s 1 minute work = –1/240

Net work in 1 minute =

1/120 + 1/160 – 1/240

Taking LCM = 480

= 4/480 + 3/480 – 2/480 = 5/480 = 1/96

So, tank will be filled in 96 minutes

That is 1 hour 36 minutes

Hence, option (b) is correct.

Answer: (c)

Solution:
Let work rates be a, b, c.

a + b = 1/12
b + c = 1/15
a + c = 1/20

Adding,

2(a + b + c) = 1/12 + 1/15 + 1/20 = 1/5

So,

a + b + c = 1/10

Hence, all three together take 10 days.

Given,

R + 4 = 10

So,

R = 6

Now,

c = 1/10 − 1/12 = 1/60

So, C alone = 60 days

Since R = 6,
60 = R + 54

Hence, option (c) is correct.

Answer: (c)

Explanation:

Efficiency of:

• A = 1/20
• B = 1/30
• C = 1/60

Take LCM of 20, 30, 60 = 60

So, efficiency ratio:

• A = 60/20 = 3
• B = 60/30 = 2
• C = 60/60 = 1

Thus, wage ratio = 3 : 2 : 1

Total ratio = 6

Total wages = Rs. 66000

Value of 1 part = 66000/6 = Rs. 11000

So,

• A earns = 3 × 11000 = Rs. 33000
• B earns = 2 × 11000 = Rs. 22000
• C earns = 1 × 11000 = Rs. 11000

Hence, option (c) is correct.