This set covers the Union Budget 2026-27, the 16th Finance Commission report, the new GDP and CPI base years and RBI monetary policy decisions of 2026. These are core economy topics for Prelims and also link to fiscal federalism in polity.
How to practise: read each question and tap the option you think is correct. You will see right away whether you got it, along with a short explanation, and your score is tracked at the bottom of the screen. This set has 15 questions.
Topics covered in this set
- Union Budget 2026-27 fiscal numbers
- Tax and customs changes in Budget 2026-27
- 16th Finance Commission recommendations
- New GDP series with base year 2022-23
- New CPI series with base year 2024
- RBI monetary policy in 2026
UPSC Current Affairs MCQs with answers and explanations
Q1. In the Union Budget 2026-27 presented in February 2026, the fiscal deficit target for 2026-27 was set at:
a) 4.4 percent of GDP
b) 4.3 percent of GDP
c) 4.0 percent of GDP
d) 4.8 percent of GDP
Q2. The public capital expenditure proposed in the Union Budget 2026-27 (February 2026) was about:
a) Rs 11.2 lakh crore
b) Rs 10 lakh crore
c) Rs 12.2 lakh crore
d) Rs 15 lakh crore
Q3. According to the Union Budget 2026-27 (February 2026), the Centre aims to bring its debt-to-GDP ratio to about what level by 2030-31?
a) 50 plus or minus 1 percent
b) 40 plus or minus 1 percent
c) 60 plus or minus 1 percent
d) 35 plus or minus 1 percent
Q4. The Union Budget 2026-27 (February 2026) proposed to raise the Securities Transaction Tax on futures from 0.02 percent to:
a) 0.03 percent
b) 0.04 percent
c) 0.1 percent
d) 0.05 percent
Q5. The 16th Finance Commission report, tabled in Parliament on 1 February 2026, recommended what share of the divisible pool of central taxes for States?
a) 41 percent
b) 42 percent
c) 40 percent
d) 45 percent
Q6. Which new criterion did the 16th Finance Commission (report tabled February 2026) add to the horizontal devolution formula?
a) Tax and fiscal effort
b) Contribution to GDP
c) Literacy rate
d) Length of international border
Q7. Which of the following is correct about the 16th Finance Commission recommendations tabled in February 2026?
a) It raised the States' share to 50 percent
b) It used the 1971 population as the only demographic criterion
c) It discontinued revenue deficit grants
d) It recommended a fiscal deficit limit of 4 percent of GSDP for States
Q8. In October 2026, the RBI Monetary Policy Committee changed the repo rate:
a) from 5.50 percent to 5.25 percent
b) from 5.25 percent to 5.00 percent
c) from 6.00 percent to 6.25 percent
d) from 5.25 percent to 5.50 percent
Q9. In October 2026, the RBI shifted its monetary policy stance from neutral to:
a) accommodative
b) calibrated tightening
c) withdrawal of accommodation
d) expansionary
Q10. The new series of National Accounts released by MoSPI in February 2026 uses which base year?
a) 2011-12
b) 2017-18
c) 2022-23
d) 2023-24
Q11. Which method was introduced for agriculture and manufacturing in the new GDP series released in February 2026?
a) Double deflation
b) Single extrapolation only
c) Pro-rata benchmarking
d) Fixed weight averaging
Q12. The new Consumer Price Index series released in February 2026 has which base year?
a) 2012
b) 2020
c) 2022
d) 2024
Q13. The new CPI series launched in February 2026 classifies items into 12 divisions in line with:
a) COICOP 2018
b) NIC 2008
c) ISIC Revision 4
d) HS 2022
Q14. According to the provisional estimates released by MoSPI in June 2026, India's real GDP growth for 2025-26 was:
a) 6.5 percent
b) 7.7 percent
c) 7.1 percent
d) 8.2 percent
Q15. The Union Budget 2026-27 (February 2026) cut the customs duty on dutiable goods imported for personal use from 20 percent to:
a) 15 percent
b) 5 percent
c) 10 percent
d) Nil
Quick revision notes
- Budget 2026-27: fiscal deficit 4.3 percent of GDP, capex Rs 12.2 lakh crore, debt target 50 plus or minus 1 percent by 2030-31.
- 16th Finance Commission (chair Arvind Panagariya) kept the States' share at 41 percent for 2026-31.
- The 16th Finance Commission added contribution to GDP (10 percent weight) and ended revenue deficit grants.
- New GDP series (27 February 2026) uses base year 2022-23 and double deflation for agriculture and manufacturing.
- New CPI series (February 2026) uses base year 2024 and 12 COICOP 2018 divisions.
- RBI raised the repo rate to 5.50 percent and moved to calibrated tightening in October 2026.
Frequently asked questions
Why did the RBI raise rates in October 2026?
The RBI cited rising food and fuel prices, broadening core inflation and risks such as a weak monsoon and oil price volatility. It raised the repo rate by 25 basis points to 5.50 percent and moved to a calibrated tightening stance.
What is new in the 16th Finance Commission formula?
It added contribution to GDP with a 10 percent weight and dropped tax and fiscal effort. Population weight rose to 17.5 percent, while area fell to 10 percent.
Why do base-year revisions matter?
A recent base year reflects the current structure of the economy and consumption, so growth and inflation figures become more accurate. India revised GDP to 2022-23 and CPI to 2024 in February 2026.
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