Industrial Growth, Policy Reforms and LPG: RAS Prelims MCQs
91 RAS Prelims MCQs on industrial growth, policy reforms and the LPG reforms of 1991 cover the Industrial Policy Resolutions, the licensing system, the 1991 balance of payments crisis, privatisation and disinvestment. The MSME definition and Make in India are asked as facts and statements, and the explanations tie each policy to its year.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 71–80 of 91 questions
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q71. Read the following statements regarding Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI): I. FDI implies investment in a foreign country involving management control. II. FPI generally involves short-term investment in financial assets like stocks and bonds. Which of the statements given above is/are correct?
Explanation
Foreign investment is broadly classified into Foreign Direct Investment and Foreign Portfolio Investment. FDI involves a long-term interest and usually includes a significant degree of management control over a business in a foreign country. In contrast, FPI typically involves shorter-term investments in financial assets such as stocks and bonds without direct control over the company operations. Both are essential.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q72. What was the effect of systematic tariff reduction under globalization on domestic manufacturing in India?
Explanation
Under the process of globalization, India systematically reduced import tariffs, which had a profound impact on domestic manufacturing. This policy change ended the era of high protectionism and forced domestic firms to face international competition. To survive, Indian companies were compelled to become more cost-efficient and quality-conscious. This shift led to improvements in productivity, better resource allocation, and overall industrial modernisation.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q73. The term ‘Brownfield FDI’ refers to:
Explanation
Brownfield Foreign Direct Investment occurs when a company or government entity purchases or leases existing production facilities or acquires an existing company in a foreign country to launch new business activity. This is different from greenfield investment, where a parent company starts a new venture by constructing new facilities. Brownfield investments are often preferred because they allow for faster market entry.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q74. Consider the following states and arrange them from North to South as they are geographically covered along the Delhi-Mumbai Industrial Corridor (DMIC) alignment: I. Haryana II. Rajasthan III. Gujarat IV. Maharashtra Select the correct order:
Explanation
The Delhi-Mumbai Industrial Corridor alignment follows a specific geographical path from North to South across several Indian states. It begins in the northern state of Haryana, then passes through the extensive territory of Rajasthan. Continuing southward, the corridor enters Gujarat, which hosts a significant number of industrial nodes. Finally, it reaches its southern terminus in Maharashtra at the Jawaharlal Nehru Port.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q75. The concept of integrating industrial development with robust transportation networks to reduce logistics costs is best exemplified in India by:
Explanation
The Industrial Corridors program is a strategic initiative designed to integrate industrial development with high-speed transportation networks.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q76. Which of the following is a major criticism of Special Economic Zones (SEZs) in India?
Explanation
Despite their potential for boosting exports and attracting investment, Special Economic Zones in India have faced significant criticism. A major concern involves the acquisition of large tracts of fertile agricultural land for industrial purposes, which has often led to the displacement of local farmers and affected their livelihoods. Other criticisms include the potential for creating economic disparities that do not benefit everyone.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q77. Read the following statements regarding the performance of the MSME sector in India: I. It accounts for more than 40% of India’s total exports. II. It is the second-largest employer in the country after agriculture. III. MSMEs are completely immune to technological disruptions and credit crunches. Which of the statements given above are correct?
Explanation
The Micro, Small and Medium Enterprises sector plays a crucial role in India’s development. It currently accounts for more than 40% of the country’s total exports and is recognized as the second-largest employer after agriculture. However, the sector remains vulnerable to various external shocks, such as technological disruptions and periodic credit crunches. Therefore, claiming that MSMEs are immune to challenges is inaccurate.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q78. The Stand-Up India scheme, closely associated with the startup ecosystem, specifically aims to promote entrepreneurship among:
Explanation
The Stand-Up India scheme is a government initiative specifically designed to promote entrepreneurship at the grassroots level. It aims to facilitate bank loans between ten lakh and one crore rupees to at least one Scheduled Caste or Scheduled Tribe borrower and at least one woman borrower per bank branch. The goal is to encourage these groups to set up greenfield enterprises.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q79. In 1991, to tide over the Balance of Payments crisis, India had to airlift its physical gold reserves to pledge with banks in which countries?
Explanation
During the peak of the 1991 Balance of Payments crisis, India’s foreign exchange reserves had depleted to a level barely enough to cover two weeks of essential imports. To avoid a sovereign default and secure emergency financial assistance, the government was forced to airlift its physical gold reserves. These reserves were pledged with the Bank of England and the Union Bank of Switzerland.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q80. Find the odd one out among the following initiatives/schemes based on their primary target sector.
Explanation
Among the listed initiatives, Make in India, the Production Linked Incentive scheme, and the National Industrial Corridor Development Programme are all primarily focused on the industrial and manufacturing sectors. They aim to boost manufacturing output and attract investment. In contrast, PM-KISAN is a central sector scheme that provides income support to landholding farmer families. Thus, it belongs to the agricultural sector.
Answer key for these questions
Q
Correct answer
71
(c) Both I and II
72
(d) Forced firms to become more cost-efficient and quality-conscious.
73
(a) Acquiring or merging with an existing company in a foreign country.
74
(a) I, II, III, IV
75
(c) The Industrial Corridors program
76
(d) Acquisition of fertile land causing displacement of farmers.
77
(c) I and II only
78
(b) Scheduled Castes, Scheduled Tribes, and Women
79
(d) England and Switzerland
80
(c) PM-KISAN
Key facts from Industrial Growth, Policy Reforms and LPG
The Industrial Policy Resolution of 1948 first introduced the mixed economy; the 1956 resolution divided industries into three schedules, with Schedule A reserved for the State.
The Industries (Development and Regulation) Act, 1951 governed industrial licensing, known as the Licence Raj; the Dutt Committee of 1967 inquired into it.
The IMF and the World Bank gave India structural adjustment loans in 1991.
Compulsory licensing today remains for some industries, such as electronic aerospace and defence equipment.
Transferring ownership and control of a public sector enterprise to the private sector is privatisation; DIPAM manages government investment and public asset management.
The MSME definition of 2020 uses investment in plant and machinery and annual turnover; Make in India was launched in 2014.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Industrial Growth, Policy Reforms and LPG?
This page has 91 practice MCQs on Industrial Growth, Policy Reforms and LPG (Indian Economy). Each has the correct answer, and most have an explanation.
What did the Industrial Policy Resolution of 1956 do?
It classified industries into three categories: Schedule A for the exclusive responsibility of the State, Schedule B for the State and private sector together, and Schedule C for the private sector. It is called the Economic Constitution of India.
What is privatisation?
The transfer of ownership, management and control of a public sector enterprise to the private sector. It differs from partial disinvestment, where the Government sells only a part of its shares and keeps control.
Which Act governed industrial licensing in India?
The Industries (Development and Regulation) Act, 1951. It required industrial units to get a licence from the Government, and the system came to be known as the Licence Raj until it was dismantled in 1991.
