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 31–40 of 54 questions
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q31. Read the following statements regarding the role of AI in future services: I. Generative AI is expected to significantly augment customer support services. II. AI implementation will completely resolve the issue of low-quality jobs by transforming all informal jobs into formal tech jobs. III. AI models require massive cloud computing infrastructure, thereby boosting the data center industry. Which of the above statements is/are correct?
Explanation
Artificial Intelligence is set to augment several service functions, particularly in customer support through generative models. These advanced AI models require massive cloud computing resources, which directly boosts the growth of the data center industry. However, it is unrealistic to expect that AI will completely resolve all employment quality issues or automatically formalize all informal jobs within the tech sector soon.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q32. Match the transport sub-sectors in List I with the recent initiatives in List II and select the correct answer:
Transport Sub-sector
Recent Initiative/Concept
A. Railways
i. FASTag for electronic toll collection
B. Aviation
ii. Jal Marg Vikas Project
C. Roadways
iii. Krishi UDAN
D. Inland Waterways
iv. Dedicated Freight Corridors
Explanation
Dedicated Freight Corridors belong to railways, Krishi UDAN to aviation, FASTag to roadways and the Jal Marg Vikas Project to inland waterways. This gives A-iv, B-iii, C-i, D-ii.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q33. If a foreign tourist visits Rajasthan to witness the Pushkar Fair and purchases local handicrafts, how is this transaction classified under GATS modes of supply?
Explanation
Under the GATS framework, trade in services is categorized by how the service is delivered. When a foreign tourist travels to another country, such as India, to experience a festival and purchase local goods, it is classified as consumption abroad. This is known as Mode 2 of service supply, where the consumer moves to the location of the service provider to receive it.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q34. Identify the correct statement regarding India’s telecom sector’s contribution to digital services:
Explanation
India’s telecommunications network serves as the backbone for delivering essential public goods through digital interfaces. By integrating with digital identity and payment systems, the sector enables millions of citizens to access government services and financial products remotely. While the digital divide still exists, the use of mobile-based platforms has significantly enhanced social inclusion and provided a foundation for the growing digital economy.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q35. In the context of the service sector, what does ‘BPO’ stand for?
Explanation
BPO stands for Business Process Outsourcing, which involves contracting specific business tasks to a third-party service provider. This sector is a major part of India’s service-led growth, covering functions like customer support, technical assistance, and back-office operations. By specializing in these tasks, BPO firms help global companies reduce costs and improve efficiency while providing large-scale employment opportunities for the domestic workforce.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q36. Read the following statements regarding the tourism sector’s economic impact: Statement I: Tourism provides significant indirect employment in sectors like transport, handicrafts, and agriculture. Statement II: The tourism sector requires extremely high capital investment per job created compared to heavy manufacturing. Select the correct response:
Explanation
Tourism is a vital economic driver that provides significant indirect employment across various sectors, including handicrafts, transport, and agriculture. Unlike heavy manufacturing, which requires massive capital investment for every job created, tourism is a labor-intensive sector that can generate high employment with relatively lower capital. This makes it an ideal industry for supporting inclusive growth and providing diverse livelihoods.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q37. Which financial entity acts as the primary regulator for the capital markets in India?
Explanation
The Securities and Exchange Board of India serves as the primary regulatory authority for the country’s capital markets. Its main responsibilities include protecting the interests of investors, promoting the development of the securities market, and regulating the activities of various market intermediaries. By ensuring transparency and fair play, it helps maintain investor confidence and facilitates the efficient flow of capital.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q38. The rapid growth of higher educational institutions without stringent quality controls often leads to which of the following effects?
Explanation
The rapid expansion of higher education institutions without proper quality control often results in a surplus of graduates who lack the specific skills required by modern industries. This gap between academic degrees and job requirements creates a significant employability challenge. Instead of increasing research output, it necessitates extensive corporate training programs to make new hires work-ready for various professional roles.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q39. Read the following features of India’s services exports: I. Software services constitute the largest component. II. Export of travel and tourism services is highly vulnerable to global pandemics. III. India holds a higher share in global services exports compared to its share in global merchandise exports. IV. Professional and management consulting services are rapidly growing components. V. India imports more software services than it exports. Which of the above statements are correct?
Explanation
India’s services exports are characterized by the dominance of software services and the growth of professional consulting. These exports are vulnerable to global shocks, as seen with travel during the pandemic. Notably, India holds a larger share in global services exports compared to its merchandise share.
RAS PrelimsIndian Economy · Service Sector: Role, Challenges and Opportunities
Q40. Which of the following represents the best strategy to improve the quality of employment in the service sector?
Explanation
Improving the quality of employment in the service sector requires modernizing the approach to labor protection. A key strategy involves formalizing gig and informal work by providing portable social security benefits and focusing on continuous skill up-gradation. This ensures that workers in flexible roles have financial safety nets and the necessary training to transition into more stable, higher-value positions over time.
Answer key for these questions
Q
Correct answer
31
(b) I and III only
32
(a) A-iv, B-iii, C-i, D-ii
33
(b) Consumption abroad (Mode 2)
34
(b) Use of the telecom network to deliver public goods via digital identity and payment interfaces
35
(c) Business Process Outsourcing
36
(c) Statement I is correct, but Statement II is incorrect.
37
(a) Securities and Exchange Board of India (SEBI)
38
(b) A surplus of graduates lacking industry- relevant skills
39
(b) I, II, III and IV
40
(c) Formalizing gig work through portable social security and skill up-gradation
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.
