Money Market: UPSC Previous Year Questions (Indian Economy)
2 previous year UPSC Prelims questions on Money Market (Indian Economy). Choose an option to see the answer and explanation.
Explanations state facts as of the year each question was asked; words like “recently” refer to that year.
Showing 1–2 of 2 questions
UPSC 2010Indian Economy · Money Market
Q1. With reference to the National Investment Fund to which the disinvestment proceeds are routed, consider the following statements: 1. The assets in the National Investment Fund are managed by the Union Ministry of Finance. 2. The National Investment Fund is to be maintained within the Consolidated Fund of India. 3. Certain Asset Management companies are appointed as the fund managers. 4. A certain proportion of annual income is used for financing select social sectors. Which of the statements given above is/are correct?
Explanation
The National Investment Fund (NIF) was created in India to receive the proceeds from the disinvestment of public sector undertakings (PSUs). The idea was to use these funds strategically for social sector development and investment.
Statement 1 is incorrect: the NIF’s assets were managed by selected public sector mutual funds, namely UTI Asset Management Company Ltd., SBI Funds Management Private Ltd., and LIC Mutual Fund Asset Management Company Ltd., not directly by the Union Ministry of Finance.
Statement 2 is incorrect: The NIF was kept outside the Consolidated Fund of India. This was done to ensure that the disinvestment proceeds were used for their intended purpose (social sector development) and not simply absorbed into general government expenditure.
Statement 3 is correct: The Government appoints Asset Management Companies (AMCs) from the public sector to manage the fund.
Statement 4 is correct: 75% of the annual income from NIF is allocated to social sector schemes (education, health, employment). 25% is used for capital investment in profitable/ revivable CPSEs to support their expansion and diversification.
UPSC 2010Indian Economy · Money Market
Q2. A great deal of Foreign Direct Investment (FDI) to India comes from Mauritius than from many major and mature economies like the UK and France. Why?
Explanation
India receives significant FDI from Mauritius primarily due to the Double Taxation Avoidance Agreement (DTAA) between the two countries. DTAA is a tax treaty that prevents individuals/entities from being taxed twice on the same income. It promotes cross-border investments by offering tax relief. Historically, this agreement allowed Mauritius-based investors to route investments into India with tax benefits, leading to higher FDI flows compared to countries like the UK and France. India has DTAA with several countries, including Mauritius, Singapore, USA, UK, Germany, Japan, Canada, France, Australia, Netherlands, China, and Bangladesh. India does not have DTAA with Afghanistan, Iraq, and Pakistan.
Answer key for these questions
Q
UPSC year
Correct answer
1
2010
(c) 3 and 4
2
2010
(b) India has double taxation avoidance agreement with Mauritius
Frequently asked questions
How many previous year UPSC questions are there on Money Market?
This page covers 2 previous year UPSC Prelims GS Paper-I questions on Money Market (Indian Economy), asked from 2001 to 2024. Each has the correct answer and an explanation.
How should I use previous year UPSC questions for Prelims?
Attempt each question first, then open the answer and read the explanation for every option. Repeat by chapter, and track which statements UPSC reuses across years. Previous year questions show the exam pattern and difficulty level.
Which years are covered for Money Market?
Questions on Money Market (Indian Economy) are available for 8 years, from 2001 to 2024. Use the Year filter to practise a single paper.
