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Indian Express
5 days ago
- Business
- Indian Express
Daily subject-wise quiz : Economy MCQs on India's agricultural trade, oilseeds covered under MSP and more (Week 112)
UPSC Essentials brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today's subject quiz on Economy to check your progress. 🚨 Click Here to read the UPSC Essentials magazine for May 2025. Share your views and suggestions in the comment box or at With reference to India's agricultural trade, consider the following statements: 1. India's agriculture exports decreased in 2024-25 from the preceding fiscal year ended March 2024. 2. India agricultural imports have increased in 2024-25 over 2023-24. 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 Explanation — India's agricultural exports increased 6.4% to $51.9 billion in 2024-25, up from $48.8 billion in the previous fiscal year, which ended March 2024. This was in contrast to the nearly flat 0.1% increase in the value of its overall goods exports, from $437.1 billion in 2023-24 to $437.4 billion in 2024-25. Hence, statement 1 is not correct. — However, the value of imports was far higher. While total merchandise imports increased by 6.2% between 2023-24 and 2024-24 (from $678.2 billion to $720.2 billion), agriculture imports increased by 17.2%. Hence, statement 2 is correct. — All of this comes as India is negotiating trade agreements with the United States and the European Union, both of which want tariff reductions and increased market access for their agricultural exports. Therefore, option (b) is the correct answer. To read more: How FTAs with US, EU, UK will impact India's farm trade Food and fuel inflation are largely driven by: 1. Rainfall 2. Temperature 3. Production policies of major petroleum exporting nations 4. Weather-related phenomena affecting crop output. Select the correct answer using the codes given below: (a) 1 and 2 only (b) 1, 2 and 4 only (c) 3 and 4 only (d) 1, 2, 3 and 4 Explanation — Between February 8, 2023 and February 6, 2025, the Reserve Bank of India (RBI) kept its key short-term 'repo' lending rate for banks unchanged at 6.5%. — During the roughly two-year period (February 2023 to January 2025), inflation based on the official consumer price index (CPI) averaged 5.2% year on year. The consumer food price index (CFPI) rose even higher, to 7.6%. — At the same time, the so-called core inflation rate, which removes food and fuel goods from the CPI when calculating yearly price increases, was only 4.1%. Many cited the comparatively low 'core' inflation as sufficient rationale for the RBI's monetary policy council to lower interest rates. — Food and fuel inflation is primarily driven by supply-side factors such as rainfall, temperature, and other weather-related phenomena affecting food output, as well as geopolitical developments and production policies in key petroleum exporting countries. Therefore, option (d) is the correct answer. Consider the following statements: 1. The credit-to-deposit ratio of scheduled commercial banks (SCBs) marginally decreased during 2024-25. 2. The gap between credit and deposit growth narrowed, with banks continuing to increase their term deposit rates to mobilise deposits to bridge the funding gap. 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 Explanation — During the year 2024-25, the credit-to-deposit ratio of scheduled commercial banks (SCBs) grew modestly as bank credit growth exceeded deposit growth. Hence, statement 1 is not correct. — However, the credit-to-deposit growth ratio has reduced, with banks continuing to raise term deposit rates in order to mobilise deposits and bridge the funding gap. Hence, statement 2 is correct. — SCBs saw further improvement in asset quality, as seen by lower gross NPA (GNPA) and net NPA (NNPA) ratios, as well as a continuing fall in the slippage ratio. The provision coverage ratio (PCR) and profitability metrics, such as return on asset (ROA) and return on equity (ROE), were strong, although the net interest margin (NIM) weakened. Therefore, option (b) is the correct answer. (Source: With reference to the Carbon Border Adjustment Mechanism (CBAM), consider the following statements: 1. It seeks to put a tariff of up to 85 per cent on carbon intensive products such as iron, steel and aluminium. 2. It was first proposed by the World Trade Organisation. Which of the statements given above are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 Explanation — India's goods exports worth at least $775 million to the UK continue to face the risk of higher duties under its Carbon Border Adjustment Mechanism (CBAM) despite the conclusion of a Free Trade Agreement (FTA) earlier this month. — CBAM, a policy first proposed by the European Union and later adopted by the United Kingdom, attempts to impose a 35 per cent tax on carbon-intensive items such as iron, steel, and aluminium. Hence, statements 1 and 2 are not correct. — During discussions, India sought to win an exception for MSMEs from the CBAM policy after exporters informed the Ministry of Commerce and Industry that they were unable to meet the policy's stringent data requirements. Exporters were also concerned that complying with the carbon tax would compromise manufacturers' confidential trade data. — The UK official confirmed that CBAM was not included in the India-UK FTA, stating that these types of measures are typically not included in such agreements. — Arguing that CBAM is not WTO-compliant, India had also proposed a 'rebalancing mechanism' which would require UK to compensate Indian industries for losses incurred due to the policy. Therefore, option (d) is the correct answer. Which of the following oilseeds are covered under the minimum support prices (MSP)? 1. Niger 2. Groundnut 3. Sunflower 4. Soyabean Select the correct answer using the codes given below: (a) 2 and 3 only (b) 2, 3 and 4 (c) 1, 2, 3 and 4 (d) 3 and 4 only Explanation — The Centre announced minimum support prices (MSP) for 14 crops for the 2025-26 Kharif Marketing Season (KMS), with moong seeing the lowest and ragi the highest increase. — In recent years, the government has promoted millet crops such as ragi and jowar, declaring them as Shree Anna. Ragi accounts for only 0.51 percent of the country's gross cropped area and is primarily farmed in Karnataka, Tamil Nadu, and Maharashtra. Maharashtra, Karnataka, Rajasthan, Tamil Nadu, and Uttar Pradesh are the major jowar-producing states. — Among oilseeds, the MSP for niger seed has been established at Rs 9,537 per quintal, 9.41% more than the previous season, and soyabean (yellow) at Rs 5,328 per quintal, 8.91% higher. The MSP for groundnut and sunflower seeds has increased by 7% and 6%, respectively. Therefore, option (c) is the correct answer. To read more: Centre announces MSP hike for 14 Kharif crops; highest for ragi, 3% increase for paddy Sorry for the inconvenience caused. All remaining questions and answers are correctly marked. Daily Subject-wise quiz — History, Culture, and Social Issues (Week 112) Daily subject-wise quiz — Polity and Governance (Week 112) Daily subject-wise quiz — Science and Technology (Week 112) Daily subject-wise quiz — Economy (Week 111) Daily subject-wise quiz — Environment and Geography (Week 111) Daily subject-wise quiz – International Relations (Week 111) Subscribe to our UPSC newsletter and stay updated with the news cues from the past week. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.
Indian Express
19-05-2025
- Business
- Indian Express
The ‘core' of inflation, and RBI's rate cutting decisions
Between February 8, 2023 and February 6, 2025, the Reserve Bank of India (RBI) kept its key short-term 'repo' lending rate for banks unchanged at 6.5%. This roughly two-year period (February 2023 to January 2025) saw inflation based on the official consumer price index (CPI) average 5.2% year-on-year. It was even higher, at 7.6%, for the consumer food price index (CFPI). At the same time, the so-called core inflation rate – which excludes food and fuel items from the CPI to compute the annual price increase – was only 4.1%. The relatively low 'core' inflation was cited by many, then, as reason enough for the RBI's monetary policy committee to cut interest rates. Food and fuel inflation are largely driven by supply-side factors – such as rainfall, temperature and other weather-related phenomena affecting crop output or geopolitical developments and production policies of major petroleum exporting nations. Given the inherently volatile nature of food and fuel inflation – which monetary policy cannot effectively address, as interest rates primarily work by influencing borrowing costs and aggregate demand in the economy – the RBI, it was argued, should focus on 'core' than the headline 'general' CPI inflation. While RBI has since reduced its repo rate, by 0.25 percentage points each on February 7 and April 9 to 6%, the pressure to do so came earlier. Union Commerce and Industry Minister Piyush Goyal had, on November 14, stated that it was an 'absolutely flawed theory' to consider food inflation while deciding on interest rates. The Finance Ministry's Economic Survey for 2023-24, too, had pointed to the 'anticipated easing' of rates by RBI being 'delayed' despite core inflation falling to 3.1% by June 2024. Reversal of trend The accompanying chart shows CFPI inflation ruling consistently higher than general CPI inflation, and the latter exceeding core inflation, for an extended period from July 2023 to January 2025. But the last two months have witnessed quite the opposite. CFPI inflation, at 1.8% in April 2025, was at its lowest since October 2021. It was below the headline inflation of 3.2%, which was itself the lowest since July 2019. On the other hand, core inflation, at 4.2%, was at its highest since September 2023. Simply put, if the RBI were to target core and not headline inflation today, it would be less inclined to further cut interest rates. Core inflation is currently hovering above the central bank's medium-term target of 4%! India experienced two major episodes of food inflation in the last three years. Both were courtesy of supply-side shocks. The first was Russia's invasion of Ukraine in late-February 2022 that pushed up international agri-commodity prices. The UN Food and Agriculture Organization's (FAO) world food price index (base value: 2014-16=100) soared to an all-time-high of 160.2 points in March 2022. Even as the global supply disruptions from 'war', causing imported food inflation, eased towards early 2023, there came a second shock. This one had to do with 'weather', more specifically an El Niño event from around April 2023 to May 2024. El Niño – an abnormal warming of the equatorial Pacific Ocean waters off the coasts of Ecuador and Peru, leading to enhanced evaporation and cloud-formation in that region at the expense of Australia, Southeast Asia and India – is generally associated with weak rainfall in the subcontinent. The long and strong El Niño of 2023-24 did translate into subpar monsoon, post-monsoon and winter rains. It was accompanied by a delayed and short winter, culminating in heat waves from the second half of March to June 2024. The effects, in terms of lower crop production and elevated food prices, were felt from July 2023 through the whole of 2024. What to expect The end of El Niño, resulting in an above-average monsoon last year, followed by a mild La Niña (El Niño's opposite 'cold' phase that normally contributes to good showers and lower temperatures in India), enabled an agricultural turnaround in 2024-25. The benefits of that accrued with the kharif (monsoon-sown) crop's market arrivals from late-2024. With a bountiful rabi (winter-spring) crop as well, food inflation pressures have ebbed since the start of this calendar year. The India Meteorological Department's forecast of above-normal rainfall for the ensuing southwest monsoon season (June-September), no El Niño expected in 2025, and the FAO food price index of 128.3 points for April well below its March 2022 peak (the US Department of Agriculture projects record production of wheat, rice, corn and oilseeds for 2025-26), the outlook for CFPI inflation looks benign going forward. Equally encouraging is oil prices: Brent crude is trading at just over $65 per dollar, as against $75 three months ago and $83 last year at this time. And it isn't only food and fuel. Three months back, the rupee was in free fall, touching an all-time-low of 87.99 to the dollar on February 10. This, even as India's official foreign exchange reserves plunged from $704.89 billion to $623.98 billion between September 27 and January 17. The uncertainties unleashed by Donald Trump taking over as US President triggered a net pullout of some $22.7 billion by foreign portfolio investors (FPI) from India's equity and debt markets during October 2024-February 2025. Trump's sweeping 'reciprocal tariff' actions led to further outflows of $2.34 billion in April. Those uncertainties have subsided somewhat in recent weeks. The rupee closed at around 85.5 to the dollar on Friday, forex reserves had recovered to $690.62 billion as of May 9, and FPI have made net purchases of $1.3 billion so far this month. While food prices seem well under control, there are two reasons to believe why so is core inflation. The first is the rupee stabilising and not breaching the 90-to-the-dollar mark, where it appeared headed not too long ago. The threat of imported inflation from a depreciating rupee has been contained for now. The second factor is the prospect of cheap imports from countries such as China and Vietnam, which are having to redirect their exports away from the US due to Trump's tariffs. In the last two months alone, India has imposed anti-dumping import duties on many Chinese goods – from aluminium foils, vacuum insulated flasks and polyvinyl chloride paste resin, to solar glass and titanium dioxide – in addition to a 12% safeguard duty on specified flat steel products. A stable rupee, disinflationary pressures from Chinese imports, soft global oil and commodity prices, and the improved domestic food supply position should make it easy for the RBI to further cut rates in its upcoming monetary policy reviews. Neither food nor core inflation must worry it too much.
India Gazette
13-05-2025
- Business
- India Gazette
India's CPI inflation remains in comfortable range, eases further to 3.16% in April
New Delhi [India], May 13 (ANI): Retail inflation in India in April fell to 3.16 per cent from 3.34 per cent in March, showed official data released by the Ministry of Statistics and Programme Implementation on Tuesday. Effectively, headline inflation declined 18 basis points in April 2025 compared to March 2025. According to the government, it is the lowest year-on-year inflation since July 2019. The year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) for April 2025 over April 2024 is 1.78 per cent (Provisional). The significant decline in headline inflation and food inflation during the month of April, 2025 is mainly attributed to decline in inflation in vegetables, pulses and products, fruits, meat and fish, personal care and effects and cereals and products. Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable. Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it first time in about five years in February 2025. After the RBI's April monetary policy review meeting, the central bank said that inflation is expected to remain under control in the financial year 2025-26. The RBI Governor, Sanjay Malhotra, projected the annual Consumer Price Index (CPI) inflation at 4.0 per cent, assuming a normal monsoon. The CPI inflation is expected to be 3.6 per cent in the first quarter, 3.9 per cent in the second quarter, 3.8 per cent in the third quarter, and 4.4 per cent in the fourth quarter, with risks evenly balanced. (ANI)
India Gazette
13-05-2025
- Business
- India Gazette
India's retail inflation eases to 3.16% in April; analysts paint a positive outlook
New Delhi [India], May 13 (ANI): India's retail inflation has moderated to 3.16% in April, down from 3.34% in March, according to official data released by the Ministry of Statistics and Programme Implementation on Tuesday. This is the lowest year-on-year inflation since July 2019. The decline in inflation is attributed to a decrease in prices of vegetables, pulses and products, fruits, meat and fish, personal care and effects and cereals and products. Effectively, headline inflation declined 18 basis points in April 2025 compared to March 2025. The year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) for April 2025 over April 2024 is 1.78 per cent (Provisional). The inflation rate is within the Reserve Bank of India's (RBI) manageable range of 2-6% Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable. Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent. After the RBI's April monetary policy review meeting, the central bank said that inflation is expected to remain under control in the financial year 2025-26. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory well. The RBI held its benchmark repo rate steady at 6.5 per cent for the eleventh consecutive time, before cutting it first time in about five years in February 2025. Analysts expect inflation to remain under control, allowing the RBI to focus on supporting economic growth. They expect the RBI to cut interest rates further, citing controlled inflation and a focus on growth. Moreover, a good monsoon forecast is expected to cool down food inflation further. Moderating inflation is expected to bolster economic growth and private final consumption expenditure Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Group, said, 'Softening food and crude oil prices are likely to keep inflation below the RBI's 4 per cent target, creating room for a potential repo rate cut in the upcoming MPC meeting. However, steadily rising service inflation may exert some pressure on core inflation. Overall, with inflation under control, the policy focus is expected to shift more firmly towards supporting growth--an environment that, along with a likely decline in interest rates, bodes well for corporate earnings and the Indian equity market outlook.' Aditi Nayar, Chief Economist and Head-Research and Outreach at ICRA, said, 'The benign April 2025 headline inflation print, expectations of another sub-4 per cent print in May 2025, the dip in crude oil prices in the recent weeks, and the IMD's forecast of an above normal monsoon in 2025 as well as an early onset in Kerala will allow the MPC to continue to place a higher weight on growth vis-a-vis inflation, when it meets in June 2025.' Hemant Jain, President, PHDCCI, said, 'This (moderation in retail inflation) is expected to further comfort RBI to reduce interest rates, in the next bi-monthly MPC meeting, which will reduce industry debt burden... Going ahead, we expect food inflation to cool down further given the anticipation of a good monsoon. Further, the crude prices are expected to be range-bound between USD 60 and USD 65 per barrel in the short to medium term, further boosting private final consumption expenditure and therefore bolstering economic growth.' Sankar Chakraborti, MD and CEO, Acuite Ratings and Research, said, '...we expect the Reserve Bank of India to cut the repo rate by an additional 50 basis points cumulatively in the coming months.' Rajani Sinha, Chief Economist, CareEdge Ratings, said, 'For FY26, we expect CPI inflation to average 4.2 per cent. While commodity prices have cooled off, trade policy uncertainties and geopolitical tensions remain monitorable, given their implications on global supply chains. On the monetary policy front, moderating inflation should provide comfort to the MPC in undertaking further rate cuts. We expect a further 50 bps reduction in the policy rate in FY26'. (ANI)
Indian Express
13-05-2025
- Business
- Indian Express
Retail inflation rate eases to near six-year low of 3.16% in April
Retail inflation rate slipped to a 69-month or near six-year low of 3.16 per cent in April, primarily due to moderation in prices of food items including vegetables, pulses, cereals, meat and fish, data released by the National Statistics Office (NSO) showed. This marked the sixth month of a downward trajectory in retail inflation, the lowest inflation level after July 2019 and the third successive month of inflation rate remaining below the Reserve Bank of India's band of 4+/- 2 per cent for medium-term inflation targeting. Food inflation, based on the Consumer Food Price Index (CFPI), moderated for the sixth consecutive month, easing to a 42-month low of 1.78 per cent in April from 2.69 per cent a month ago and 8.7 per cent in April 2024. Vegetables recorded a deflation of 10.98 per cent in April, the sharpest pace of decline since February 2023, while pulses also recorded a deflation of 5.23 per cent in April as against a deflation of 2.73 per cent in the previous month, marking the fastest fall in prices over six years. The meat and fish segment registered a fall in prices to (-) 0.35 per cent after a gap of 22 months in April 2025, while the cereals inflation slipped to a 35-month low of 5.3 per cent due to better kharif output. 'The easing of food inflation would help in bringing relief to households and the consumption demand as we begin the new fiscal,' Paras Jasrai, Associate Director, India Ratings and Research said. Going ahead, a favourable monsoon should help keep inflation in control, raising expectations of a rate cut by the RBi in the upcoming June monetary policy review meeting. 'A record rabi harvest and robust pulses output indicated by the Union Ministry of Agriculture's Second Advance Estimates, and the forecast of a favourable monsoon for the upcoming kharif season should keep food inflation in check this fiscal. Given the current inflation trajectory, a further 25-basis point rate cut is expected in the Reserve Bank of India's monetary policy review in June,' a CRISIL report said. While the overall inflation in FY26 is seen below 4 per cent, the cumulative rate cut in FY26 would depend on the pace of decline in inflation and evolving inflation-growth dynamics, economists said. The decline in retail inflation was sharper in rural areas than urban areas, which is expected to increase the recovering rural demand. Rural retail inflation was recorded at 2.92 per cent in April as against 3.25 per cent in March, while urban inflation declined to 3.36 per cent in April from 3.43 per cent in March. Food inflation in rural areas eased to 1.85 per cent in April from 2.82 per cent in March, while that in urban areas moderated to 1.64 per cent in April from 2.48 per cent in March. The declining trend, however, was not uniform as fuel and light and core inflation saw an uptick. Fuel and light inflation rate rose to 2.92 per cent in April from 1.48 per cent in the previous month. Core inflation — the non-food, non-fuel segment of inflation — remained firm at 4.1 per cent in April, the highest level since November 2023, indicating signs of demand being steady, Jasrai said. Retail inflation (excluding vegetables and pulses) shot up to an 18-month high of 4.4 per cent in April, he said. Some economists differed on the view that the lower inflation print will lead to a rate cut, saying that while the headline inflation print is within RBI's forecast for Q1, it will take note of the fact that the decline is mainly due to lower food prices. 'While 3.2% is within RBI's forecast of 3.6% for Q1, the central bank will be cognizant of the fact that the number has come down mainly due to vegetables which have a weight of 6 per cent in the index. Excluding this component keeps inflation at the target rate. Therefore, this factor will be kept in mind. It does look like that this number may not trigger a rate cut given that there would be time to evaluate both the monsoon and tariff issues before taking a final call in August. Inflation would likely be low in May and June too due to the base effect,' Madan Sabnavis, Chief Economist, Bank of Baroda said. Aanchal Magazine is Senior Assistant Editor with The Indian Express and reports on the macro economy and fiscal policy, with a special focus on economic science, labour trends, taxation and revenue metrics. With over 13 years of newsroom experience, she has also reported in detail on macroeconomic data such as trends and policy actions related to inflation, GDP growth and fiscal arithmetic. Interested in the history of her homeland, Kashmir, she likes to read about its culture and tradition in her spare time, along with trying to map the journeys of displacement from there. ... Read More
