2001 General Studies, all questions

UPSC Prelims 2001 · General Studies

Question 31: Economy and Social Development

Assertion (A): Ceiling on foreign exchange for a host of current account transaction heads was lowered in the year 2000. Reason (R): There was a fall in foreign currency assets also.

aBoth A and R are individually true, and R is the correct explanation of A
bBoth A and R are individually true, but R is NOT a correct explanation of A
cA is true, but R is false
dA is false, but R is true

AnswerThe answer is (c).

The key takes A as true and R as false. In 2000 the Foreign Exchange Management Act replaced FERA, and the rules and limits on current account transactions such as travel, education and medical expenses were being revised. Even if both statements were true, a fall in foreign currency assets would not be the reason for changing these limits, so R does not explain A.

  • A. The key accepts that the current account limits were revised in 2000.
  • R. The key does not accept a fall in foreign currency assets as the reason.

How you could have got this

If you were sure statement 1 is correct, (d) goes. Then judge the second statement; if it is correct too, decide whether it explains the first.

This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong
  • (a) The key rejects R, so it cannot explain A.
  • (b) R is false in the key, not merely a non-explanation.
  • (c) Right as per the key: A true, R false.
  • (d) A is true in the key.

Worth knowing: As printed, A says the ceilings were lowered, but the 2000 changes under FEMA are generally described as liberalising them, so the wording or the key may be off.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2001, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.