UPSC Prelims Practice Questions — Capital flight and pressure on the rupee

Question 1

India's quarterly Balance of Payments data, including the current account deficit figure, is compiled and released by which one of the following?

Accepted Answer

Reserve Bank of India

Answer

Ministry of Statistics and Programme Implementation

Answer

Securities and Exchange Board of India

Answer

Department of Economic Affairs, Ministry of Finance

Question 2

The November 2024 operational framework permitting a Foreign Portfolio Investor breaching the prescribed equity threshold to reclassify its holding as Foreign Direct Investment was issued by SEBI jointly with which one of the following institutions?

Accepted Answer

Reserve Bank of India

Answer

Department for Promotion of Industry and Internal Trade

Answer

Insurance Regulatory and Development Authority of India

Answer

National Bank for Agriculture and Rural Development

Question 3

Which RBI Governor launched the foreign-currency non-resident (FCNR-B) deposit scheme in September 2013 that mobilised more than US$30 billion to defend the rupee?

Accepted Answer

Raghuram Rajan

Answer

D. Subbarao

Answer

Urjit Patel

Answer

Shaktikanta Das

Question 4

During the 2026 Strait of Hormuz disruption, India's crude-import route diversification and the maintenance of about 60 days of strategic crude stock are operationalised primarily under which one of the following ministries?

Accepted Answer

Ministry of Petroleum and Natural Gas

Answer

Ministry of External Affairs

Answer

Ministry of Commerce and Industry

Answer

Ministry of Finance

Question 5

In 2026 the Chief Economic Adviser described India as facing a 'live Balance of Payments stress test'. Which one of the following best captures the meaning of this phrase?

Accepted Answer

Simultaneous strain on both the current account (a widening deficit) and the capital account (weakening inflows), testing external-sector resilience

Answer

A sovereign default by India on its external debt obligations

Answer

A statutory RBI audit of commercial banks' foreign exchange exposure

Answer

An IMF-mandated review of India's fiscal (budget) deficit

Question 6

Which one of the following was the RBI's principal instrument for defending the rupee in FY2025-26, reaching a record magnitude of about US$53 billion that year?

Accepted Answer

Net sale of US dollars in the spot foreign exchange market

Answer

Open market purchase of government securities

Answer

Imposition of capital controls on FDI by SEBI

Answer

Issuance of sovereign gold bonds by the Ministry of Finance

Question 7

The RBI's 'outstanding net short dollar position in the forward market' (about US$103 billion at end-March 2026) refers to which one of the following?

Accepted Answer

The RBI's contracted commitments to deliver US dollars at a future date

Answer

The stock of US dollars physically held in the RBI's spot reserves

Answer

Dollars borrowed by the RBI from the IMF under a swap line

Answer

Foreign-currency deposits held by non-resident Indians

Question 8

Foreign Portfolio Investors in Indian securities markets are registered and regulated primarily under the 2019 regulations administered by which one of the following bodies?

Accepted Answer

Securities and Exchange Board of India

Answer

Reserve Bank of India

Answer

International Financial Services Centres Authority

Answer

Ministry of Corporate Affairs

Question 9

The Strait of Hormuz, the world's most critical oil chokepoint, lies between the territorial waters of Oman and which one of the following countries on its northern shore?

Accepted Answer

Iran

Answer

United Arab Emirates

Answer

Iraq

Answer

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UPSC Prelims Practice Questions — Capital flight and pressure on the rupee

Q1. India's quarterly Balance of Payments data, including the current account deficit figure, is compiled and released by which one of the following?

Q2. The November 2024 operational framework permitting a Foreign Portfolio Investor breaching the prescribed equity threshold to reclassify its holding as Foreign Direct Investment was issued by SEBI jointly with which one of the following institutions?

Q3. Which RBI Governor launched the foreign-currency non-resident (FCNR-B) deposit scheme in September 2013 that mobilised more than US$30 billion to defend the rupee?

Q4. During the 2026 Strait of Hormuz disruption, India's crude-import route diversification and the maintenance of about 60 days of strategic crude stock are operationalised primarily under which one of the following ministries?

Q5. In 2026 the Chief Economic Adviser described India as facing a 'live Balance of Payments stress test'. Which one of the following best captures the meaning of this phrase?

Q6. Which one of the following was the RBI's principal instrument for defending the rupee in FY2025-26, reaching a record magnitude of about US$53 billion that year?

Q7. The RBI's 'outstanding net short dollar position in the forward market' (about US$103 billion at end-March 2026) refers to which one of the following?

Q8. Foreign Portfolio Investors in Indian securities markets are registered and regulated primarily under the 2019 regulations administered by which one of the following bodies?

Q9. The Strait of Hormuz, the world's most critical oil chokepoint, lies between the territorial waters of Oman and which one of the following countries on its northern shore?