PYQ – May 2025

Answer: (b) Only two

Explanation:
SEBI’s Alternative Investment Funds (AIF) Regulations cover pooled investment vehicles that collect funds from investors for investing in accordance with a defined investment policy — typical examples are private equity funds, venture capital funds and hedge funds (and similar private pooled vehicles). Stocks and bonds are traditional market instruments / securities markets investments and are not themselves AIFs (an AIF might invest in stocks or bonds, but those instruments are not “AIFs”). So among the four items, Hedge Funds (II) and Venture Capital (IV) fall within the broad AIF universe. (SEBI AIF Regulations provide the formal definition and categories).

Answer: (a) I and II only

Explanation:
The RBI’s routine income-generating activities include: interest income from government securities it holds and from liquidity operations (open market operations), and returns (gains and interest) from management of foreign exchange and overseas assets. These two items correspond to I (buying/selling government bonds / OMO interest income) and II (forex transactions / reserve management). RBI does not run commercial pension funds as a business (III is not a standard source of RBI income) and it does not normally lend to private companies as a routine income source (IV is not correct). Printing/distributing banknotes is not an “income source” — note-printing is treated as a currency-management function (and the economics of seigniorage and cost allocation are more complex), but the simple statement “printing and distributing currency notes” is not a conventional RBI income stream the way interest from securities and forex gains are. In practice, the largest regular items creating RBI’s surplus are interest/returns on its public securities holdings and gains from foreign exchange/reserve management.

Answer: (b) Only two

Explanation:
Row II is correctly matched: the Directorate of Revenue Intelligence (DRI) is the central agency for customs intelligence and operates under the Department of Revenue (Ministry of Finance) and enforces customs law. Row III as stated — a directorate dealing with systems and data analytics to assist tax officers under the Ministry of Finance — is consistent with the Ministry’s recent institutional emphasis on data & analytics; so this row is treated as correctly matched in the question’s context. Row I is incorrect: the Directorate of Enforcement (commonly called Enforcement Directorate, ED) does enforce laws including the Fugitive Economic Offenders Act and PMLA/FEMA matters but it is an agency under the Department of Revenue, Ministry of Finance, not under an Internal Security Division of the Ministry of Home Affairs. Thus two rows are correctly matched. (For administrative control see ED’s official description.)

Answer: (b) II only

Explanation:
Statement II is correct: BRSR (Business Responsibility & Sustainability Reporting) is structured to capture Environmental, Social and Governance (ESG) disclosures and focuses heavily on non-financial performance indicators (sustainability practices, social and governance metrics) though it may also include some quantifiable metrics. Statement I is incorrect: BRSR is mandated by SEBI (Securities and Exchange Board of India) for certain listed companies (not by RBI). So the regulator responsible for the BRSR requirement is SEBI; RBI does not mandate BRSR for listed companies.

Answer: (a) Both Statement I and Statement II are correct and Statement II explains Statement I

Explanation:
Under the Income-tax Act agricultural income (income from agricultural operations on land) is generally exempt from income tax (Section 10 deals with agricultural income exemptions, subject to definitions and conditions). Many rural activities intimately linked to agriculture (for example, activities like certain forms of animal husbandry associated directly with agricultural land — small-scale wool rearing, traditional poultry kept on agricultural holdings) are treated as agricultural income and so can be exempt. Statement II refers to the special treatment of rural agricultural land under the Act: certain rural agricultural land is excluded from the definition of “capital asset” (so transfer of such land does not give rise to capital gains in those specific cases). The legal exclusion of rural agricultural land from being a taxable capital asset is one reason why agricultural income / gains connected with rural agricultural land are outside the normal tax net — therefore Statement II helps explain why some rural agricultural activities are not taxed as capital gains or business income. (A caution: in practice, whether a specific activity is taxable depends on the facts — large commercial poultry farms, agro-industries, or activities detached from cultivation may be taxed as business income; UPSC’s question tests the basic statutory principle.)

Answer: (c) I and III only

Explanation:
Statement I is correct: India joined the international Minerals Security Partnership (MSP) initiative (the MSP is a multilateral effort to secure supply chains for critical minerals). Statement III is correct: the MMDR Amendment Act, 2023 (Mines and Minerals (Development and Regulation) Amendment) included provisions enabling the Central Government to conduct auctions for certain specified critical and strategic minerals (centralising auctions for those minerals to secure strategic supply). Statement II is incorrect: while India has identified a set of critical minerals and does have reserves for several important minerals (lithium, graphite, certain rare-earths in parts), it is not resource-rich in all 30 critical minerals listed — the country needs to develop exploration and processing capacities and in many cases relies on imports. The parliamentary amendment in 2023 aimed partly to accelerate domestic exploration and centralised auctions for strategic/critical mineral blocks.

Answer: (a) Both Statement II and Statement III are correct and both of them explain Statement I

Explanation:
Why this is so: A bond is a debt instrument: bondholders lend money to the company and receive fixed interest payments; shareholders (stockholders) are owners and receive dividends only after obligations to creditors are met. In liquidation or bankruptcy, creditors (which include bondholders) have priority over equity holders — creditors are repaid before any residual is distributed to shareholders. Because of the fixed income nature of bonds and creditor priority, bondholders face lower residual risk compared with equity holders, whose returns are uncertain and residual. Therefore Statements II and III are both correct and together explain Statement I.

Answer: (a) I and II only

Explanation:
Statements I and II reflect observable market trends: India’s derivatives market (especially on the NSE) is one of the largest in the world by number of contracts traded, and the Indian equity market has seen rapid growth in market capitalisation in recent years — at times the Indian market’s growth has outpaced other exchanges such as Hong Kong in certain metrics. Statement III is false: there are regulatory and investor-protection mechanisms in India — the SEBI (Securities and Exchange Board of India) and exchanges undertake investor awareness, risk warnings, and regulation of market intermediaries (registered advisors, brokers). So it is not correct to say there is no regulatory body to warn or act — SEBI is the regulator responsible for investor protection and market supervision.

Answer: (a) Both Statement II and Statement III are correct and both explain Statement I

Explanation:
A circular economy focuses on reuse, repair, remanufacture and recycling to keep materials in use and reduce waste. This reduces the demand for virgin raw materials (Statement II) and reduces wastage and inefficiencies in production (Statement III). Both mechanisms lead to lower overall energy use and fewer emissions compared to a linear “take-make-dispose” model — for instance, recycling metals or using remanufactured components generally requires less energy than producing new metal from ore, and that reduction in energy intensity translates into lower greenhouse gas emissions. Hence Statements II & III are true and both help explain Statement I.

Answer: (a) I and II only

Explanation:
Capital receipts are transactions that either create a liability (e.g., borrowings) or reduce the assets of the government (e.g., disinvestment — sale of public sector assets reduces government holdings). Thus Statement I is correct. Borrowings (debt raised) and disinvestment proceeds are standard examples of capital receipts — Statement II is correct. Statement III is incorrect: interest received on loans given by the government is a revenue receipt (income), not a liability. On the other hand, interest paid by the government is a liability/expense. The question is testing the standard distinction between capital receipts (borrowings, disinvestment) and revenue receipts (tax revenue, interest received).

Answer: (c) Both I and II

Explanation:
Raja Ram Mohan Roy combined a deep engagement with Indian religious and philosophical traditions (he drew on Upanishadic monism and classical Indian thought) with a strong commitment to reason, rationalism and social reform. He challenged social evils (notably he campaigned against sati), encouraged modern education, and promoted human dignity and social equality — he is regarded as a reformer who synthesised respect for certain Eastern philosophical ideas with an embrace of rational and humanitarian principles. Both statements reflect complementary aspects of his outlook.

Answer: (c) Only three

Explanation:
The Non-Cooperation Programme (launched by Gandhi 1920–22) included boycott of law courts and foreign cloth (1), strong emphasis on non-violence (2) and encouraged local self-help institutions such as establishing panchayats for local dispute settlement (4). Item 3 as worded (“retention of titles and honours without using them in public”) is not an accurate description of the programme: Non-Cooperation encouraged resignation from government posts and the surrender or non-use of colonial titles and honours as part of the boycott of symbols of imperial authority, not passive “retention without public use.” Therefore three of the items (1, 2 and 4) were part of the programme.

Answer: (b) a large wheel with earthen pots tied to the outer ends of its spokes,

Explanation:
The araghatta is a traditional, animal-driven water-lifting device — similar in principle to the Persian wheel / noria — consisting of a large wheel whose rim carried containers (often earthen pots) that lifted water as the wheel turned; bullocks or other animals provided rotation. Such devices were widely used in traditional agricultural irrigation to raise water from wells or canals for irrigation.

Answer: (a) Mahendravarman I

Explanation:
Mahendravarman I, a Pallava ruler, is associated with literary and artistic activity — he is traditionally credited with the satirical play Mattavilasa Prahasana. He is also known by epithets like Vichitrachitta (the imaginative/wonderful-minded) and titles that reflect patronage of art and letters. This question tests familiarity with Pallava cultural history and rulers’ sobriquets.

Answer: (b) Chandragupta II

Explanation:
Fa-hien (Faxian) was a Chinese Buddhist pilgrim who travelled to India in the early 5th century CE to collect Buddhist texts; his visit is usually dated to the period of the Gupta Empire under Chandragupta II (Vikramaditya). He travelled to view Buddhist sites and stayed for several years, providing one of the earliest Chinese travel accounts of classical India.

Answer: (c) Rajendra I (Chola)

Explanation:
Rajendra I of the Chola dynasty (early 11th century CE) mounted a major naval expedition against Srivijaya (centered in Sumatra and controlling trade routes in the Malay archipelago). The Chola campaign asserted naval power, punished perceived obstruction of trade, and extended Chola influence in maritime Southeast Asia. Rajendra’s expedition is one of the notable examples of medieval South Indian naval capabilities and overseas intervention.

Answer: (b) Only two

Explanation:
The correct matchings are: Asmaka — Godavari (Asmaka was a southern Deccan region associated with the Godavari basin) and Kosala — Sarayu (Kosala was the region where the Sarayu river flows). The other two pairs are incorrect in the way given: Kamboja is usually associated with the north-west (regions beyond the north-west Himalaya – not ordinarily matched with “Vipas” in the way the question frames), and Avanti is associated with the Narmada (not the Mahanadi). So two pairs are correctly matched.

Answer: (d) Lahore

Explanation:
Pandit Vishnu Digambar Paluskar founded the first Gandharva Mahavidyalaya on 5 May 1901 at Lahore as a formal school for Hindustani classical music open to the public. This was an important institutional innovation: a move away from purely guru-shishya private instruction toward a more public, systematised schooling for music. (Later, the Gandharva Mahavidyalaya idea spread and other branches/organisations followed; but the first school was established at Lahore in 1901.)

Answer: (b) district-level administration

Explanation:
Ashokan inscriptions and Mauryan administrative records indicate several officer titles associated with local and district administration; terms such as Pradeshika, Rajuka, Yukta are understood to denote officials functioning at the district/regional administrative tier (responsible for revenue collection, local law & order and governance tasks). The Mauryan administrative system had specialized officer roles operating at district/territorial levels beneath provincial and central authorities.

Answer: (c) Both I and II

Explanation:
The Non-Cooperation Movement (launched 1920) formally adopted the aim of attaining Swaraj by legitimate and peaceful means — that emphasis on lawful, non-violent mass mobilisation is reflected in Statement I. The programme was indeed to be staged: initial non-cooperation (boycotts, resignations, non-attendance of schools/courts, refusal to buy foreign cloth) would be followed by more active civil-disobedience (including non-payment of taxes) if the British government used repression or if Swaraj was not conceded. Thus Statement II correctly captures the staged strategy envisioned by Congress leadership under Gandhi.