UPSC Prelims Practice Questions — Financial Incentives for undertaking mining reforms by States included in the Scheme for Special Assistance to States for Capital Investment FY 2026-27

Q1. With reference to the mining sector reform incentive component of the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY 2026-27, consider the following statements. Which of the above is/are NOT correct?

  1. The incentive component carries an outlay of ₹5,000 crore.
  2. The Ministry of Mines is the nodal Ministry for the component.
  3. Rewards to States flow through the SASCI instrument of 50-year interest-free loans.
  4. The component is financed entirely through Finance Commission grants-in-aid to States.
  • A. 1 and 2
  • B. 2 and 3
  • C. 3 only
  • D. 4 only

Q2. Under the SASCI FY 2026-27 mining reform incentive, what is the largest single reward a State can earn for operationalising at least 10% of the major mineral blocks it had successfully auctioned till 31.03.2026?

  • A. ₹100 crore
  • B. ₹200 crore
  • C. ₹250 crore
  • D. ₹20 crore per block

Q3. With reference to the Scheme for Special Assistance to States for Capital Investment (SASCI), consider the following statements. Which of the above is/are NOT correct?

  1. It was launched in October 2020 in the wake of the COVID-19 pandemic.
  2. It provides States 50-year interest-free loans for capital expenditure.
  3. It is administered by the Department of Expenditure, Ministry of Finance.
  4. It is a Centrally Sponsored Scheme requiring a 40% matching contribution from States.
  • A. 1 and 4
  • B. 4 only
  • C. 2 and 3
  • D. 1, 2 and 3

Q4. The parent Scheme for Special Assistance to States for Capital Investment (SASCI) is administered by which of the following?

  • A. Department of Expenditure, Ministry of Finance
  • B. Department of Economic Affairs, Ministry of Finance
  • C. NITI Aayog
  • D. Department of Investment and Public Asset Management

Q5. The institution of a 'State Mining Index' to encourage professionalisation and reform of State mining departments was announced in which Union Budget?

  • A. Union Budget 2023-24
  • B. Union Budget 2024-25
  • C. Union Budget 2025-26
  • D. Union Budget 2026-27

Q6. Under the State Mining Readiness Index (SMRI), States are grouped into three categories — A, B and C — on the basis of which one of the following?

  • A. Their mineral endowment
  • B. Their gross state domestic product (GSDP)
  • C. Their total geographical area
  • D. Their share in national mineral revenue

Q7. The State Mining Readiness Index, instituted pursuant to the reform agenda of the Union Budget 2025-26, is prepared and released by which Ministry?

  • A. Ministry of Mines
  • B. Ministry of Coal
  • C. Ministry of Finance
  • D. Ministry of Commerce and Industry

Q8. In the Union Budget 2025-26, reforms in mining, support to States, asset monetisation and public-private partnerships were proposed as part of which 'engine' of development?

  • A. The first engine — Agriculture
  • B. The second engine — MSMEs
  • C. The third engine — Investment
  • D. The fourth engine — Exports

Q9. The auction of blocks of the 24 critical and strategic minerals listed in Part D of Schedule-I of the MMDR Act, 1957 is conducted by which authority?

  • A. The Central Government
  • B. The respective State Governments
  • C. The Geological Survey of India
  • D. The National Mineral Exploration Trust

Q10. With reference to the non-coal mineral regime under the MMDR Act, 1957, consider the following statements. Which of the above is/are correctly identified?

  1. An Exploration Licence permits the holder to undertake reconnaissance and prospecting operations.
  2. Barytes, Felspar, Mica and Quartz have been classified as major minerals.
  3. The Central Government is empowered to auction 24 critical and strategic minerals under Part D of Schedule-I.
  4. Coal and lignite blocks are ranked and rewarded under the State Mining Readiness Index.
  • A. 1 and 3 only
  • B. 2 and 4 only
  • C. 1, 2 and 3
  • D. 1, 2, 3 and 4

Q11. Comparing the FY 2025-26 and FY 2026-27 mining reform incentives, consider the following statements. Which of the above is/are NOT correct?

  1. In FY 2025-26, an incentive of ₹7.0 crore was provided to 7 States for successful auction of mineral blocks.
  2. The FY 2026-27 component carries an enhanced outlay of ₹5,000 crore.
  3. Both editions are anchored in the SASCI scheme.
  4. The FY 2026-27 component discontinued the State Mining Readiness Index and replaced it with a new Ease of Mining Index.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 4

Q12. Which one of the following is the Union Government's flagship instrument providing States 50-year interest-free loans dedicated to capital expenditure?

  • A. Scheme for Special Assistance to States for Capital Investment (SASCI)
  • B. Finance Commission grants-in-aid to States
  • C. Rural Infrastructure Development Fund (RIDF)
  • D. Additional borrowing ceiling under the FRBM framework