Q1. With reference to Begum Hazrat Mahal during the Revolt of 1857, consider the following statements:
1. She assumed control of the Awadh administration after the annexation of the state by the British.
2. She allied with rebel leaders such as Nana Sahib and Tantia Tope to mount a joint offensive against British positions in Central India.
3. Even after retreating to Nepal, she continued to oppose British authority until her death in exile.
Which of the statements given above is/are correct?
Explanation:
- Statement 1 is correct: After the annexation of Awadh in 1856 and the exile of her husband Wajid Ali Shah, she took charge of the administration and played a political and military role in the revolt from Lucknow.
- Statement 2 is incorrect: Although there was a broad anti-British sentiment, there is no evidence of direct military coordination between Begum Hazrat Mahal and Nana Sahib or Tantia Tope. They operated in different regions — Awadh, Kanpur, and Central India respectively.
- Statement 3 is correct: After British forces regained control, she escaped to Nepal in 1859 and continued her opposition to the British till her death in 1879, maintaining her political stance even in exile.
- Answer: (c). 1 and 3 only
Q2. Consider the following statements regarding Maulvi Liaqat Ali:
1. He established his military headquarters in Khusro Bagh during the revolt of 1857.
2. He was executed by the British in 1872 after being captured in Nepal.
3. He was sentenced to life imprisonment and transported to the Andaman Islands.
2. He was executed by the British in 1872 after being captured in Nepal.
3. He was sentenced to life imprisonment and transported to the Andaman Islands.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Explanation:
- Statement 1 is correct: His operational base during the revolt was indeed Khusro Bagh in Allahabad.
- Statement 2 is incorrect: He was arrested in Bombay, not in Nepal, and was not executed, but rather transported for life.
- Statement 3 is correct: He was sentenced to transportation for life to the Andamans.
- Hence, 1 and 3 only are correct.
- Answer: (c) 1 and 3 only
Q3. With reference to Queen Victoria’s Proclamation of 1858, which of the following statements correctly reflect its provisions and objectives?
1. It introduced the post of Viceroy in India to replace the office of the Governor-General.
2. It disavowed any future annexation of princely states and assured native rulers the preservation of their rights.
3. It guaranteed Indians, irrespective of race or religion, an equal right to enter public services based solely on merit.
4. It imposed a uniform code of religious practices to strengthen administrative unity.
2. It disavowed any future annexation of princely states and assured native rulers the preservation of their rights.
3. It guaranteed Indians, irrespective of race or religion, an equal right to enter public services based solely on merit.
4. It imposed a uniform code of religious practices to strengthen administrative unity.
Which of the statements given above is/are correct?
(a) 1, 2 and 3 only
(b) 2 and 4 only
(c) 1 and 3 only
(d) 1, 2, 3 and 4
Explanation:
Statement 1: Correct
The office of Governor-General was retained in name, but the title of Viceroy was added to signify that the holder was now the representative of the British Crown, not just the East India Company. Lord Canning became the first Viceroy of India.
Statement 2: Correct
The Proclamation specifically disclaimed the intention to annex more Indian states. It assured the native princes that their treaties and rights would be respected as long as they acknowledged British paramountcy.
Statement 3: Correct
The Proclamation promised equality of opportunity in public employment to Indians regardless of race or religion, provided they had the requisite ability and education. However, this was not faithfully implemented in practice.
Statement 4: Incorrect
On the contrary, the Proclamation promised religious non-interference, declaring that the British government would not impose or interfere with Indian religious practices. This was intended to restore trust after the rebellion, which had strong religious undertones.
Answer: (a) 1, 2 and 3 only
Q4. Assertion (A): India has exempted certain gene-edited crops from the regulatory procedures applicable to genetically modified organisms (GMOs).
Reason (R): Gene-edited crops under SDN-1 and SDN-2 categories do not involve insertion of foreign DNA and can be indistinguishable from conventionally bred varieties.
Which one of the following is correct in the context of the above statements?
(a) Both A and R are true, and R is the correct explanation of A
(b) Both A and R are true, but R is not the correct explanation of A
(c) A is true, but R is false
(d) A is false, but R is true
Explanation:
Assertion – True: India, in a 2022 regulatory decision, exempted SDN-1 and SDN-2 gene-edited crops from stringent biosafety assessments. These crops no longer require the same biosafety assessment as transgenic GMOs, provided they are free from foreign DNA
Reason – True: Gene-edited crops produced under SDN-1 (Site-Directed Nuclease 1) and SDN-2 involve genetic modifications that do not entail the insertion of foreign DNA. Instead, these modifications are comparable to changes that can occur naturally or through conventional breeding techniques. As a result, such gene-edited plants are indistinguishable from conventionally bred varieties and even using current detection methods, it is often impossible to tell them apar.
Correct Explanation: The indistinguishability and absence of transgenes is precisely why they were exempted—making R the correct explanation of A.
Correct Answer: (a) Both A and R are true, and R is the correct explanation of A
Q5. With reference to the regulation and characteristics of genetically modified (GM) and gene-edited crops in India, consider the following statements:
1. Unlike Bt cotton, GM mustard has been exempted from environmental clearance owing to its classification under SDN-1 edits.
2. Gene-edited crops regulated under SDN-1 and SDN-2 are allowed commercial release in India without prior approval from the Genetic Engineering Appraisal Committee (GEAC).
3. Bt cotton contains genes from a soil bacterium that confer endogenous resistance to lepidopteran pests.
4. While gene-edited crops may lack transgenes, they can still be classified as GMOs under India’s Environmental Protection Act, 1986.
2. Gene-edited crops regulated under SDN-1 and SDN-2 are allowed commercial release in India without prior approval from the Genetic Engineering Appraisal Committee (GEAC).
3. Bt cotton contains genes from a soil bacterium that confer endogenous resistance to lepidopteran pests.
4. While gene-edited crops may lack transgenes, they can still be classified as GMOs under India’s Environmental Protection Act, 1986.
How many of the above statements are correct?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Explanation:
- Statement 1 – Incorrect: GM mustard is not an SDN-1 product; it is a transgenic crop and is not exempt from GEAC clearance. Its release required approval from the Genetic Engineering Appraisal Committee (GEAC) and has faced judicial scrutiny much like Bt cotton. GM mustard is not exempted from environmental clearance; in fact, the Supreme Court has quashed such clearances and demanded rigorous regulatory review.
- Statement 2 – Correct: In March 2022, India exempted gene-edited products created using SDN-1 and SDN-2 techniques (which do not introduce foreign DNA) from the strict regulations applied to transgenic GMOs. Such crops can be considered for field and commercial release with reduced oversight and do not require GEAC approval
- Statement 3 – Correct: Bt cotton incorporates genes from Bacillus thuringiensis, a soil bacterium, which produces Cry proteins toxic to specific insect pests.
- Statement 4 – Correct: Even gene-edited crops, if they cause heritable genomic change, can fall under the broader GMO classification under the Environment Protection Act, unless specifically exempted.
- Correct Answer: (d) All four
Q6. With reference to the Variable Rate Reverse Repo (VRRR) auctions conducted by the Reserve Bank of India, consider the following statements:
1. VRRR auctions are conducted to inject durable liquidity into the banking system to promote lending.
2. The interest rate in a VRRR auction is determined through competitive bidding by participating banks.
3. Fixed Rate Reverse Repo and VRRR operate on the same mechanism, with both being market-driven and auction-based.
2. The interest rate in a VRRR auction is determined through competitive bidding by participating banks.
3. Fixed Rate Reverse Repo and VRRR operate on the same mechanism, with both being market-driven and auction-based.
Which of the statements given above is/are correct?
(a) 2 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Explanation:
- Statement 1 – Incorrect: VRRR absorbs excess liquidity, i.e., it withdraws surplus money from the banking system, not injects it. Banks submit bids at rates at which they are willing to park their surplus funds, and the final auction rate is determined by the bids received.
- Statement 2 – Correct: VRRR interest rates are determined via competitive bidding—banks quote the amount and the rate they are willing to accept.
- Statement 3 – Incorrect: Fixed Rate Reverse Repo is not market-driven; the RBI unilaterally sets the rate. It does not involve auctions.
- Correct Answer: (a), 2 only
Q7. In the context of monetary policy tools used by the RBI, what could be the likely immediate outcomes if the RBI conducts multiple VRRR auctions with very high auction sizes (e.g., ₹2.5 trillion), assuming a surplus liquidity scenario?
1. Weighted Average Call Rate (WACR) and TREPS rates are likely to move closer to or above the repo rate.
2. Banks may reduce their exposure to very short-term government securities.
3. Long-term bond yields are likely to rise sharply in response to each VRRR auction.
2. Banks may reduce their exposure to very short-term government securities.
3. Long-term bond yields are likely to rise sharply in response to each VRRR auction.
Select the correct answer using the code below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Explanation:
- Statement 1 – Correct: VRRR auctions absorb liquidity, which leads to tightening in the money market, pushing WACR/TREPS closer to repo rate, sometimes slightly above it.
- Statement 2 – Correct: Large VRRR auctions attract surplus funds away from short-term instruments, altering investment allocations of banks.
- Statement 3 – Incorrect: Long-term bond yields are not sharply affected by VRRRs, which mostly influence the short end of the yield curve.
- Correct Answer: (a). 1 and 2 only
Q8. Which of the following best explains why banks may choose not to fully participate in large-scale VRRR auctions conducted by the RBI despite having surplus liquidity?
(a) The VRRR rate is always lower than the fixed rate reverse repo, making it unattractive.
(b) Banks prefer to use surplus liquidity to invest in long-term infrastructure bonds during surplus seasons.
(c) Banks may anticipate upcoming liquidity needs such as tax outflows or balance sheet reporting dates.
(d) VRRR auctions are mandatory and participation is capped by RBI regulation.
Explanation:
Banks may withhold participation in VRRRs despite surplus liquidity if they foresee short-term obligations—e.g., tax payments, settlement obligations, or quarter-end balance sheet adjustments.
- Option A – Incorrect: VRRR rates are market-driven and often more attractive than the fixed reverse repo rate.
- Option B – Incorrect: During surplus phases, banks prefer short-term safe avenues, not long-term illiquid assets.
- Option D – Incorrect: VRRR auctions are voluntary, not mandatory, and participation is not capped arbitrarily.
- Correct Answer: (a). Banks may anticipate upcoming liquidity needs such as tax outflows or balance sheet reporting dates.
Variable Rate Reverse Repo (VRRR) Auction
The Variable Rate Reverse Repo (VRRR) auction is a key monetary policy tool used by the Reserve Bank of India (RBI) to absorb excess liquidity from the banking system. Here’s how it works and why it’s significant:
How VRRR Auction Works:
- Banks deposit surplus funds with the RBI for a short, specified period (commonly 7 days).
- Interest rate is determined through competitive bidding, making it a market-driven mechanism.
- Banks bid both the deposit amount and the minimum acceptable interest rate.
- RBI accepts bids at or above the cut-off rate based on market demand-supply conditions.
Purpose and Rationale:
- To absorb surplus liquidity from the banking system temporarily.
- Helps maintain short-term rates close to the policy repo rate and supports monetary policy effectiveness.
- Example: In July 2025, RBI conducted 7-day VRRR auctions ranging from ₹1 lakh crore to ₹2.5 trillion amid over ₹3 trillion in surplus liquidity.
- Surplus liquidity can result from government spending, CRR cuts, or capital inflows.
Impact on the Financial System:
- Short-term money market rates rise as liquidity is absorbed.
- Short-term bond yields may also rise, reflecting tighter liquidity.
- Enhances monetary policy transmission and stabilizes financial conditions.
Difference from Fixed Rate Reverse Repo:
- VRRR uses variable rates and auctions, making it market-responsive.
- Fixed rate reverse repo uses a static rate set by RBI without competitive bidding.