UPSC Prelims Practice Questions — Deceptively benign

Q1. India's March 2026 wholesale inflation reading of 3.88% — a multi-year high that diverged sharply from the far milder retail inflation — is based on the Wholesale Price Index, which is compiled and released by which one of the following?

  • A. Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade (Ministry of Commerce and Industry)
  • B. National Statistical Office, Ministry of Statistics and Programme Implementation
  • C. Monetary Policy Department, Reserve Bank of India
  • D. Central Statistics Office under the NITI Aayog

Q2. Under the Wholesale Price Index (base 2011-12), whose divergence from retail inflation was highlighted in March 2026, the all-commodities basket is divided into how many major commodity groups?

  • A. Three
  • B. Four
  • C. Six
  • D. Twelve

Q3. The item basket and weights of the revised Consumer Price Index (base 2024=100) are primarily derived from which one of the following?

  • A. Household Consumption Expenditure Survey 2023-24
  • B. Periodic Labour Force Survey 2023-24
  • C. National Family Health Survey-5
  • D. Annual Survey of Industries 2022-23

Q4. With reference to the revised Consumer Price Index series (base 2024=100), consider the following statements: 1. The base year has been updated from 2012=100 to 2024=100. 2. The item weights are derived from the Household Consumption Expenditure Survey 2023-24. 3. The series adopts the COICOP-2018 classification with 12 divisions at the first level. 4. The Wholesale Price Index has been subsumed within this revised CPI series. Which of the above is/are NOT correct?

  1. The base year has been updated from 2012=100 to 2024=100.
  2. The item weights are derived from the Household Consumption Expenditure Survey 2023-24.
  3. The series adopts the COICOP-2018 classification with 12 divisions at the first level.
  4. The Wholesale Price Index has been subsumed within this revised CPI series.
  • A. 1 only
  • B. 3 and 4
  • C. 4 only
  • D. 2 and 3

Q5. Consider the following statements comparing the revised Wholesale Price Index series with its predecessor: 1. The number of items in the basket has increased from 697 to 957. 2. The weights in the revised series are based on Gross Value of Output, replacing the Net Traded Value used in the earlier series. 3. The revised series shifts the base year from 2011-12 to 2024-25. Which of the statements given above is/are correct?

  1. The number of items in the basket has increased from 697 to 957.
  2. The weights in the revised series are based on Gross Value of Output, replacing the Net Traded Value used in the earlier series.
  3. The revised series shifts the base year from 2011-12 to 2024-25.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q6. With reference to the new price index series (base 2022-23) launched by the Office of the Economic Adviser in June 2026, consider the following: 1. Output Producer Price Index (OPPI) 2. Input Producer Price Index (trial) (IPPI) 3. Service Producer Price Index for seven services 4. Consumer Food Price Index (CFPI) Which of the above are correctly identified as indices released as part of this new series?

  1. Output Producer Price Index (OPPI)
  2. Input Producer Price Index (trial) (IPPI)
  3. Service Producer Price Index for seven services
  4. Consumer Food Price Index (CFPI)
  • A. 1, 2 and 3
  • B. 1 and 4 only
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q7. Under the Monetary Policy Committee constituted under the RBI Act, consider the following: 1. Governor of the RBI as ex-officio Chairperson 2. Deputy Governor of the RBI in charge of monetary policy 3. Finance Secretary, Ministry of Finance, as an ex-officio member 4. One officer of the RBI nominated by the Central Board Which of the above are correctly identified as members of the Monetary Policy Committee?

  1. Governor of the RBI as ex-officio Chairperson
  2. Deputy Governor of the RBI in charge of monetary policy
  3. Finance Secretary, Ministry of Finance, as an ex-officio member
  4. One officer of the RBI nominated by the Central Board
  • A. 1, 2 and 3
  • B. 2, 3 and 4
  • C. 1, 2 and 4
  • D. 1, 3 and 4

Q8. Consider the following statements regarding the flexible inflation targeting framework as retained in the 2026 review: 1. Under Section 45ZA of the RBI Act, the Central Government determines the inflation target once every five years in consultation with the RBI. 2. The 4% target with a tolerance band of +/-2% has been retained for the period April 2026 to March 2031. 3. The inflation target is defined solely in terms of the Wholesale Price Index. Which of the statements given above is/are correct?

  1. Under Section 45ZA of the RBI Act, the Central Government determines the inflation target once every five years in consultation with the RBI.
  2. The 4% target with a tolerance band of +/-2% has been retained for the period April 2026 to March 2031.
  3. The inflation target is defined solely in terms of the Wholesale Price Index.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q9. To slow the rupee's slide amid the imported-inflation pressures of early 2026, the RBI is estimated to have sold approximately how much foreign exchange in the market during March 2026?

  • A. About 6-7 billion US dollars
  • B. About 16-17 billion US dollars
  • C. About 26-27 billion US dollars
  • D. About 46-47 billion US dollars

Q10. Which one of the following groups carries the single highest weight in India's Consumer Price Index basket?

  • A. Food and Beverages
  • B. Housing
  • C. Miscellaneous (services)
  • D. Fuel and Light

Q11. With reference to the rupee and India's foreign exchange reserves in 2026, consider the following statements: 1. India's forex reserves touched an all-time high of about 728 billion US dollars in the week ended 27 February 2026. 2. The rupee weakened to levels near 95 per US dollar by early July 2026. 3. The RBI drew down its reserves by selling dollars to smooth the rupee's fall. 4. India's foreign exchange reserves are the largest in the world, exceeding those of China. Which of the above is/are NOT correct?

  1. India's forex reserves touched an all-time high of about 728 billion US dollars in the week ended 27 February 2026.
  2. The rupee weakened to levels near 95 per US dollar by early July 2026.
  3. The RBI drew down its reserves by selling dollars to smooth the rupee's fall.
  4. India's foreign exchange reserves are the largest in the world, exceeding those of China.
  • A. 1 only
  • B. 2 and 3
  • C. 4 only
  • D. 1 and 4

Q12. Consider the following statements about India's adoption of flexible inflation targeting compared with the earlier monetary policy arrangement: 1. Flexible inflation targeting was formally institutionalised through an amendment to the RBI Act in 2016. 2. The Monetary Policy Committee has six members, with the RBI and the Central Government contributing three each. 3. Every decision of the Monetary Policy Committee requires unanimity among all six members. Which of the statements given above is/are correct?

  1. Flexible inflation targeting was formally institutionalised through an amendment to the RBI Act in 2016.
  2. The Monetary Policy Committee has six members, with the RBI and the Central Government contributing three each.
  3. Every decision of the Monetary Policy Committee requires unanimity among all six members.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3