Q1. The service sector is often referred to as the tertiary sector of the economy. Which of the following best defines the primary characteristic of activities classified under this sector?
Service Sector: Role, Challenges and Opportunities: RAS Prelims MCQs
54 RAS Prelims MCQs on the service sector cover its share in the economy, its classification, trade in services under GATS, digital payments and regulation. Tertiary, quaternary and quinary services, BPO, SEBI, the effect of the pandemic and the quality of higher education are asked as definitions and statements.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 1–10 of 54 questions
Q2. Read the following statements regarding the classification of the service sector:
I. Tertiary services involve basic commercial services like retail and transport.
II. Quaternary services involve knowledge-based activities like research and development.
III. Quinary services involve routine administrative tasks and clerical work.
Which of the above statements is/are correct?
I. Tertiary services involve basic commercial services like retail and transport.
II. Quaternary services involve knowledge-based activities like research and development.
III. Quinary services involve routine administrative tasks and clerical work.
Which of the above statements is/are correct?
Explanation
Economic activities are categorized into hierarchy-based levels of services. Tertiary services encompass essential commercial activities such as retail, transportation, and finance. Quaternary services represent the knowledge-based economy, focusing on research, development, and high-level information processing. Quinary services involve the highest level of decision-making by top executives and government officials, rather than routine administrative or clerical tasks performed by workers.
Q3. Given below are two statements, one labeled as
Assertion (A) and the other as Reason (R):
Assertion (A): The service sector makes the highest contribution to India’s Gross Domestic Product (GDP).
Reason (R): The service sector is the largest employer in the Indian economy, employing more than half of the total workforce.
Select the correct answer using the codes given below:
Assertion (A) and the other as Reason (R):
Assertion (A): The service sector makes the highest contribution to India’s Gross Domestic Product (GDP).
Reason (R): The service sector is the largest employer in the Indian economy, employing more than half of the total workforce.
Select the correct answer using the codes given below:
Explanation
The service sector dominates the Indian economy in terms of value, contributing significantly more than half of the national Gross Domestic Product. However, this high economic contribution does not translate into proportionate job creation. The agricultural sector remains the largest employer in the country, highlighting a structural mismatch between output generation and workforce distribution within various segments of the economy.
Q4. Match the service sub-sectors in List I with their core activities in List II and select the correct answer:
| Service Sub-sector | Core Activity |
|---|---|
| A. Trade and Repair | i. Capital market intermediation |
| B. Financial Services | ii. Governance and statutory services |
| C. Real Estate | iii. Retail distribution |
| D. Public Administration | iv. Asset development and management |
Explanation
Economic classification groups specific activities into distinct sub-sectors within the broader service industry. Trade and repair focus on retail and wholesale distribution of goods. Financial services specialize in capital market intermediation and banking functions. Real estate involves asset development and management. Public administration encompasses essential governance and statutory services provided by state institutions for the welfare of citizens across the nation.
Q5. In the context of India’s economic structure, approximately what percentage does the service sector contribute to the total Gross Value Added (GVA)?
Explanation
The service sector represents the most dynamic component of the Indian economy, typically contributing between fifty and sixty percent of the total Gross Value Added. This dominant share reflects the transition toward a knowledge-led and service-oriented developmental model. Major sub-segments like trade, hospitality, transportation, and financial services collectively drive this significant contribution to the overall national economic value today.
Q6. Read the following entities and technologies associated with the digital payments ecosystem in India:
I. National Payments Corporation of India (NPCI)
II. Bharat Bill Payment System (BBPS)
III. Aadhaar Enabled Payment System (AePS)
IV. Central Bank Digital Currency (e)
V. Society for Worldwide Interbank Financial Telecommunication (SWIFT)
Which of the above components are developed or operated primarily within India’s domestic digital infrastructure framework?
I. National Payments Corporation of India (NPCI)
II. Bharat Bill Payment System (BBPS)
III. Aadhaar Enabled Payment System (AePS)
IV. Central Bank Digital Currency (e)
V. Society for Worldwide Interbank Financial Telecommunication (SWIFT)
Which of the above components are developed or operated primarily within India’s domestic digital infrastructure framework?
Explanation
India has developed a robust domestic digital payment infrastructure through various innovative components. Key elements include the National Payments Corporation of India, which operates systems like the Bharat Bill Payment System and the Aadhaar Enabled Payment System. The introduction of the Central Bank Digital Currency further strengthens this local framework. While SWIFT is used for global transfers, it is not a domestic development.
Q7. Read the following statements regarding the relationship between the service sector and employment:
Statement I: India’s economic growth over the past two decades has been criticized as ‘jobless growth’ because employment elasticity in the service sector is low.
Statement II: The majority of the workforce transitioning out of agriculture is successfully absorbed by the high-skill IT sector.
Select the correct response:
Statement I: India’s economic growth over the past two decades has been criticized as ‘jobless growth’ because employment elasticity in the service sector is low.
Statement II: The majority of the workforce transitioning out of agriculture is successfully absorbed by the high-skill IT sector.
Select the correct response:
Explanation
India’s growth is often described as ‘jobless’ because the employment elasticity in the high-value service sector is relatively low. This means that significant increases in economic output do not result in a corresponding increase in jobs. Furthermore, the high-skill IT sector cannot easily absorb the large number of workers leaving agriculture, as these individuals often lack the specialized technical training.
Q8. The rapid expansion of the gig economy within the service sector has had which of the following primary effects on the labor market?
Explanation
The expansion of the gig economy has introduced a new level of flexibility into the labor market, allowing workers to choose tasks via digital platforms. However, this shift has also raised serious concerns regarding the lack of traditional social security, health benefits, and long-term job security for these workers. It creates a precarious employment environment where individuals operate outside standard labor protections.
Q9. Arrange the four modes of supply under the General Agreement on Trade in Services (GATS) from Mode 1 to Mode 4 in their correct sequential order:
A. Commercial presence
B. Consumption abroad
C. Presence of natural persons
D. Cross-border supply
Select the correct sequence:
A. Commercial presence
B. Consumption abroad
C. Presence of natural persons
D. Cross-border supply
Select the correct sequence:
Explanation
International trade in services is classified into four distinct modes under the GATS framework. Mode 1 involves cross-border supply, such as online consulting. Mode 2 covers consumption abroad, like tourism. Mode 3 refers to commercial presence, such as opening a foreign branch. Mode 4 involves the presence of natural persons, where individuals travel to provide services. These modes define how services are delivered.
Q10. Under the General Agreement on Trade in Services (GATS), India has historically pushed most aggressively for liberalization in which mode, given its vast pool of skilled IT professionals and doctors?
Explanation
Given its large pool of highly skilled professionals in the information technology and healthcare sectors, India has consistently advocated for greater liberalization of Mode 4 under GATS. This mode facilitates the temporary movement of natural persons across borders to provide services. Enhancing access in this area allows Indian experts to work on international projects more easily, maximizing the country’s comparative advantage.Answer key for these questions
| Q | Correct answer |
|---|---|
| 1 | (b) Provision of intangible value, professional expertise, and experiential goods |
| 2 | (a) I and II only |
| 3 | (c) A is true but R is false. |
| 4 | (a) A-iii, B-i, C-iv, D-ii |
| 5 | (c) Between 50 percent and 60 percent |
| 6 | (b) I, II, III and IV |
| 7 | (c) Statement I is correct, but Statement II is incorrect. |
| 8 | (c) Increased flexible opportunities but concerns over lack of social security and benefits |
| 9 | (a) D, B, A, C |
| 10 | (d) Mode 4 |
Key facts from Service Sector: Role, Challenges and Opportunities
- The service sector contributes between 50 and 60 per cent of India’s economy.
- Tertiary services are basic commercial services like retail and transport; quaternary services are knowledge-based, like research and development.
- Under GATS, India has pushed hardest for Mode 4, the movement of natural persons.
- A foreign tourist visiting Rajasthan and buying handicrafts is an example of consumption abroad (Mode 2).
- BPO stands for Business Process Outsourcing; SEBI is the regulator of the capital markets.
- India’s most globally competitive service is telecommunications, computer and information services; trade, hotels, transport and communication fell the most during the pandemic.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Service Sector: Role, Challenges and Opportunities?
This page has 54 practice MCQs on Service Sector: Role, Challenges and Opportunities (Indian Economy). Each has the correct answer, and most have an explanation.
What is Mode 4 under GATS?
The movement of natural persons, meaning professionals who go abroad temporarily to provide services. India has pushed for it because it has many skilled IT and other professionals.
Which body regulates the capital markets in India?
The Securities and Exchange Board of India (SEBI). It regulates stock exchanges, brokers, mutual funds and other market participants, and protects the interests of investors, under the SEBI Act of 1992, which gave it statutory powers.
What does BPO stand for?
Business Process Outsourcing, in which a company hands over a business function, such as customer support or accounts, to an outside provider. India became a leading BPO destination because of its skilled, English-speaking workforce.