UPSC Prelims Practice Questions — Indian bonds crumble as oil surges over $90 a barrel

Q1. Open Market Operations (OMOs) — the RBI's principal instrument for buying G-Secs to steady bond yields when energy shocks and heavy debt supply push yields up — are conducted under which one of the following provisions?

  • A. Section 17(8) of the Reserve Bank of India Act, 1934
  • B. Section 42(1) of the Reserve Bank of India Act, 1934
  • C. Section 24 of the Banking Regulation Act, 1949
  • D. Article 293 of the Constitution of India

Q2. Consider the following statements about how a sustained rise in crude oil prices transmits to India's debt market: 1. A higher crude price widens the Current Account Deficit chiefly by raising the merchandise import bill. 2. Costlier oil raises inflation expectations, which tends to push G-Sec yields up and bond prices down. 3. A rise in G-Sec yields lowers the government's cost of fresh market borrowing. Which of the statements given above is/are correct?

  1. A higher crude price widens the Current Account Deficit chiefly by raising the merchandise import bill.
  2. Costlier oil raises inflation expectations, which tends to push G-Sec yields up and bond prices down.
  3. A rise in G-Sec yields lowers the government's cost of fresh market borrowing.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q3. Which one of the following statements about India's position in the global crude oil market is correct?

  • A. India meets over 85% of its crude oil requirement through imports and is the world's third-largest crude oil importer.
  • B. India meets over 85% of its crude oil requirement through imports and is the world's largest crude oil importer.
  • C. India meets about half of its crude oil requirement through imports and is the world's second-largest crude oil importer.
  • D. India meets over 85% of its natural gas requirement through imports and is the world's third-largest natural gas importer.

Q4. In the context of India's petroleum sector, the term 'oil import dependence' is most appropriately measured as which one of the following?

  • A. Net crude oil imports as a share of total domestic consumption of oil
  • B. Crude oil imports as a share of India's total crude oil exports
  • C. Crude oil imports valued as a share of India's foreign exchange reserves
  • D. Domestic crude oil production as a share of total oil consumption

Q5. Which one of the following statements about the management of the Government of India's market borrowing is correct?

  • A. The Reserve Bank of India manages the Central Government's public debt and issues G-Secs on its behalf under the RBI Act, 1934.
  • B. The Securities and Exchange Board of India is the exclusive debt manager for all Central and State government borrowings.
  • C. The Department of Economic Affairs issues all dated G-Secs directly, entirely without RBI involvement.
  • D. Every State Government's debt is managed solely by its own treasury, completely outside the RBI's ambit.

Q6. Consider the following statements comparing types of Government Securities in India: 1. Treasury Bills have an original maturity of less than one year and are issued at a discount, carrying no separate coupon. 2. Dated Government Securities necessarily carry a fixed coupon and can never be issued as floating-rate bonds. 3. Both Treasury Bills and dated securities are issued by the RBI on behalf of the Government of India. Which of the statements given above is/are correct?

  1. Treasury Bills have an original maturity of less than one year and are issued at a discount, carrying no separate coupon.
  2. Dated Government Securities necessarily carry a fixed coupon and can never be issued as floating-rate bonds.
  3. Both Treasury Bills and dated securities are issued by the RBI on behalf of the Government of India.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. Which one of the following statements about the peak in India's current account deficit (CAD) in recent decades is correct?

  • A. India's CAD widened to about 4.8% of GDP in 2012-13, its highest in recent decades, amid high crude prices and heavy gold imports.
  • B. India's CAD widened to about 4.8% of GDP in 2012-13 entirely because of outflows from the services sector.
  • C. India recorded its highest-ever CAD of about 4.8% of GDP in 2020-21 during the COVID-19 pandemic.
  • D. India's external balance improved to a surplus of about 4.8% of GDP in 2012-13 owing to falling crude prices.

Q8. With reference to how a sustained rise in crude oil prices affects India's external sector, consider the following statements: 1. It enlarges the merchandise trade deficit by raising the oil import bill. 2. It tends to depreciate the rupee as demand for dollars to pay for imports rises. 3. It automatically eliminates the current account deficit by boosting petroleum-product exports. 4. It can raise domestic inflation through higher fuel and transport costs. Which of the statements given above are correctly identified?

  1. It enlarges the merchandise trade deficit by raising the oil import bill.
  2. It tends to depreciate the rupee as demand for dollars to pay for imports rises.
  3. It automatically eliminates the current account deficit by boosting petroleum-product exports.
  4. It can raise domestic inflation through higher fuel and transport costs.
  • A. 1, 2 and 4
  • B. 1 and 3 only
  • C. 2, 3 and 4
  • D. 1, 2, 3 and 4

Q9. Approximately how many million barrels per day of oil (crude plus products) transited the Strait of Hormuz in 2025, underscoring its status as the world's most critical oil chokepoint?

  • A. About 20 million barrels per day
  • B. About 34 million barrels per day
  • C. About 9 million barrels per day
  • D. About 48 million barrels per day

Q10. With reference to the Strait of Hormuz and India's crude oil supply in 2025-26, consider the following statements: 1. The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and onward to the Arabian Sea. 2. In 2025, roughly one-fifth of global petroleum-liquids consumption passed through the Strait. 3. India was the single largest destination for crude oil transiting the Strait in 2025. 4. As reported in 2026, about 70% of India's crude oil imports were being sourced from outside the Strait of Hormuz. Which of the statements given above are correctly identified?

  1. The Strait of Hormuz connects the Persian Gulf to the Gulf of Oman and onward to the Arabian Sea.
  2. In 2025, roughly one-fifth of global petroleum-liquids consumption passed through the Strait.
  3. India was the single largest destination for crude oil transiting the Strait in 2025.
  4. As reported in 2026, about 70% of India's crude oil imports were being sourced from outside the Strait of Hormuz.
  • A. 1, 2 and 4
  • B. 1, 3 and 4
  • C. 2 and 3 only
  • D. 1, 2, 3 and 4

Q11. Retail investors in India can open a Gilt account to buy Government Securities directly from the primary and secondary markets through which one of the following platforms?

  • A. RBI Retail Direct, launched by the Reserve Bank of India
  • B. SCORES, operated by the Securities and Exchange Board of India
  • C. Speed-e, operated by the National Securities Depository Limited
  • D. BSE StAR MF, operated by the Bombay Stock Exchange

Q12. With reference to India's Strategic Petroleum Reserves (SPR) established or approved under Indian Strategic Petroleum Reserves Limited (ISPRL), which of the following is/are NOT a designated SPR location? 1. Visakhapatnam (Andhra Pradesh) 2. Mangaluru (Karnataka) 3. Bikaner (Rajasthan) 4. Chandikhol (Odisha) Which of the above is/are NOT correct?

  1. Visakhapatnam (Andhra Pradesh)
  2. Mangaluru (Karnataka)
  3. Bikaner (Rajasthan)
  4. Chandikhol (Odisha)
  • A. 1 only
  • B. 3 only
  • C. 2 and 4 only
  • D. 3 and 4 only