UPSC Prelims 1999 · General Studies
Question 43: Economy and Social Development
Consider the following statements: Small-scale industries are, in most cases, not as efficient and competitive as the large-scale ones. Yet the Government provides preferential treatment and reservations in a range of products to the small firms because small-scale industries I. Provide higher employment on a per unit capital deployment basis. II. Promote a regional dispersion of industries and economic activities. III. Have performed better in export of manufactured products than the large-scale ones. IV. Provide jobs to low skill workers, who otherwise may not find employment avenues elsewhere. Which of the above statements are correct?
AnswerThe answer is (b).
Small-scale industries get preferential treatment mainly for two reasons: they create more jobs for each unit of capital than large industry does (I), and they spread industry across regions instead of crowding it into a few cities (II). They are not claimed to have out-performed large firms in manufactured exports (III), and the low-skill job argument (IV) is not counted as a main policy ground in the given answer. Remember: more jobs per rupee of capital, and regional dispersion.
- I. More employment per unit of capital than large industry.
- II. They spread industry and economic activity across regions.
- III. They are not shown to export manufactures better than large firms.
- IV. Not counted as a main ground in the given answer.
Why each option is right or wrong
- (a) Wrong. Takes IV with I; IV is not counted.
- (b) Right. I and II are the policy grounds.
- (c) Wrong. III is not accepted as a reason.
- (d) Wrong. III and IV are not counted.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 1999, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.