Daily Current Affairs Quiz: January 8, 2026

Answer: A [1 and 2 only]
Explanation:

Statement 1 is correct: Repo rate is indeed the rate at which the central bank (RBI in India) lends short-term funds to commercial banks against government securities.

Statement 2 is correct: When the repo rate increases, borrowing becomes costlier for banks. They pass this on to customers, discouraging loans and reducing demand, which helps control inflationary pressures.

Statement 3 is incorrect: Repo rate changes do not directly affect government borrowing. Government borrowing is managed through issuance of bonds and securities, not through repo transactions with the central bank. Repo is primarily a tool for regulating liquidity in the banking system, not for financing government deficits.

Answer: B [2 only]
Explanation:

Statement 1 is correct: Fiscal deficit is defined as the excess of total expenditure of the government over its total non-debt receipts (i.e., revenue receipts + non-debt capital receipts).

Statement 2 is incorrect: A higher fiscal deficit does not necessarily lead to higher inflation in all situations. It may cause inflation if financed through borrowing from the central bank (monetization of deficit), as this increases money supply. But if the deficit is financed through market borrowings or if the economy has underutilized capacity, inflationary pressures may not arise immediately.

Answer: C [Both 1 and 2]
Explanation:

Statement 1 is correct: A persistent current account deficit (CAD) means the country is importing more goods, services, and capital than it exports. This reliance on external financing makes the economy vulnerable to external shocks such as sudden capital outflows, global financial crises, or currency depreciation.

Statement 2 is correct: The current account deficit is financed through capital inflows in the capital account, such as foreign direct investment (FDI), foreign portfolio investment (FPI), external commercial borrowings, and other forms of foreign capital.

Answer: D [1, 2 and 3]
Explanation:

Statement 1 is correct: CPI indeed measures retail-level inflation faced by households, as it tracks changes in the prices of goods and services consumed by them.

Statement 2 is correct: In CPI, food and fuel carry a much higher weight compared to the Wholesale Price Index (WPI).

Statement 3 is correct: Since 2016, India’s monetary policy framework officially uses CPI (combined) as the primary measure for inflation targeting by the RBI.

Answer: A [1 and 2 only]
Explanation:

Statement 1 is correct: As per RBI norms, a loan or advance is classified as a Non-Performing Asset if interest or principal remains overdue for more than 90 days.

Statement 2 is correct: High NPAs reduce banks’ ability to extend fresh credit because their capital gets locked in bad loans, provisioning requirements increase, and overall risk appetite declines.

Statement 3 is incorrect: Even after provisioning, NPAs continue to impact bank profitability. Provisioning reduces the immediate shock, but it eats into profits and capital. Moreover, recovery prospects remain uncertain, so profitability is still affected.