Ramesh Singh Test: Industry & Infrastructure- 1


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QUESTION: 1

Which among the following were the goals of industrial policy resolution, 1948?

1. India will be a mixed economy.

2. There was a five year period for review of the policy.

3. Industries which were not covered by either the central or the state list were left open for private sector investment.

Which of these statements is/are correct?

Solution: There was a 10 year period for review of the policy.

QUESTION: 2

Consider the following statements regarding reservation of industries under industrial policy resolution, 1956.

1. Schedule A - Industries set up under this provision was known as the central public sector undertakings

2. Schedule B - industries set up under this provision was supposed to take up the initiatives with the more expansive follow up by the private sector

3. Schedule C - Industries under this provision were exempted from Industries Development and Regulation Act

Which of these statements is/are correct?

Solution:
  • All industrial areas left out of Schedules A and B were put under this in which the private enterprises had the provisions to set up industries.

  • Many of them had the provisions of licencing and have necessarily fit into the framework of the social and economic policy of the state and were subject to control and regulation in terms of the Industries Development and Regulation (IDR) Act and other relevant legislation.

QUESTION: 3

The monopolistic and restrictive trade practices Act was passed with which industrial policy statement/resolution?

Solution:
  • The Monopolistic and Restrictive Trade Practices (MRTP) Act was passed in the Industrial Policy Statement Act 1969. The Act intended to regulate the trading and commercial practices of the firms and checking monopoly and concentration of economic power.

QUESTION: 4

The term 'core industries' was created at the introduction of:

Solution: A new classificatory term i.e., core industries were created. The industries which were of fundamental importance for the development of industries were put in this category such as iron and steel, cement, coal, crude oil, oil refining and electricity. In the future, these industries came to be known as basic industries, infrastructure industries in the country.

QUESTION: 5

Which industrial policy statement/resolution had the Gandhian socialistic views?

Solution: The Industrial Policy Statement of 1977 was chalked out by a different political set up from the past with a different political fervour-the dominant voice in the government was having an anti-Indira stance with an inclination towards the Gandhian-socialistic views towards the economy.

QUESTION: 6

Consider the following statements about disinvestment.

1. Disinvestment started in India as token disinvestment.

2. The initial phase of disinvestment brought some extra funds to the government and enhanced the efficiency of PSUs dramatically.

Which of these statements is/are correct?

Solution:
  • Disinvestment started in India with a high political caution-in a symbolic way known as the 'token' disinvestment (presently being called as ‘minority state sale”).

  • This phase of disinvestment though brought some extra funds to the government (which were used to fill up the fiscal deficit considering the proceeds as the 'capital receipts') it could not initiate any new element to the PSUs, which could enhance their efficiency.

  • It remained the major criticism of this type of disinvestment, and experts around the world started suggesting the government to go for it in the way that the ownership could be transferred from the government to the private sector.

QUESTION: 7

The essence of the strategic disinvestment was:

1. The minimum shares to be divested will be 49%.

2. The wholesale sale of shares will be done to strategic partners having International class experience and expertise in the sector.

Which of these statements is/are correct?

Solution: The essence of the strategic disinvestment was

(i) The minimum shares to be divested will be 51 per cent, and

(ii) the wholesale sale of shares will be done to a 'strategic partner having international class experience and expertise in the sector.

QUESTION: 8

Consider the following statements regarding the national investment fund constituted in 2005 by the Government of India.

1. The proceeds from disinvestment will be channelized into the NIF.

2. The Corpus of the national investment fund will be of a temporary nature.

Which of these statements is/are correct?

Solution:
  • The corpus of the National Investment Fund will be permanent.

  • The Fund will be professionally managed, to provide sustainable returns without depleting the corpus, by selected Public Sector Mutual Funds (they are, UTI Asset Management Company Ltd.; SBI Funds Management Company Pvt. Ltd.; LIC Mutual Fund Asset Management Company Ltd.).

QUESTION: 9

Consider the following statements regarding the aluminium industry.

1. The cost of production for India is presently higher than international prices.

2. India's cost of production of aluminium has been increasing gradually while the world's costs remain static.

Which of these statements is/are correct?

Solution:
  • The cost of production for India is presently higher than international prices.

  • India's cost of production of aluminium has been increasing gradually while world costs remained static.

  • The Indian capacity has increased substantially in 2014–15 and 2015-16 but its utilization has not improved; utilisation was nearly 100 per cent up to 2013-14 and has declined to 50 per cent by late 2015. This has happened due to the fall in global prices.

  • The Indian aluminium industry will continue to face difficulty unless world prices increase because in the short run it is virtually impossible to reduce the cost of production.

QUESTION: 10

Labour cost is one advantage to India but it is also not working in its favour. Why?

1. Lack of flexibility in part-time work.

2. Mandatory payment of overtime wages.

3. Mandatory contributions to employees funds.

Which of these statements is/are correct?

Solution:
  • Labour cost is one advantage to India but it is also not working in its favour.

  • The problems are well-known- regulations on minimum overtime pay (the Minimum Wages Act 1948 mandates payment of overtime wages at twice the rate of ordinary rates);

  • lack of flexibility in part-time work; onerous mandatory contributions (employees funds) that become de facto taxes for low-paid workers small firms that results in a 45 cent lower disposable salary {due to their contributions to the Employee Provident Fund Organisation (EPFO), Employee Pension Scheme (EPS), Labour Welfare Fund (LWF), Employees' Deposit Linked Insurance Scheme (EDLI), and Employee State Insurance (ESI) etc.}.

  • Apparel and leather firms in India are smaller compared to firms in say China, Bangladesh and Vietnam (an estimated 78 percent of firms in India employ less than 50 workers with 10 per cent employing more than 500. In China, the comparable numbers are about 15 per cent and 28 per cent respectively).

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