UPSC Prelims 2003 · General Studies
Question 85: Economy and Social Development
With reference to Government of India’s decisions regarding Foreign Direct Investment (FDI) during the year 2001-02, consider the following statements:
- 1.Out of the 100% FDI allowed by India in tea sector, the foreign firm would have to disinvest 33% of the equity in favour of an Indian partner within four years.
- 2.Regarding the FDI in print media in India, the single largest Indian shareholder should have a holding higher than 26%.
Which of these statements is/are correct?
AnswerThe answer is (b).
The key accepts statement 2 and rejects statement 1. FDI in print media dealing with news and current affairs was held at 26 per cent with control remaining with Indian shareholders, and the key accepts that the single largest Indian shareholder had to hold more than 26 per cent. For tea, the stated 33 per cent and four-year disinvestment condition does not match the policy of the time. Such FDI questions turn on exact conditions, so learn them with the year.
- 1. The 33 per cent and four-year disinvestment terms do not match the tea policy of the time.
- 2. The key accepts that the largest Indian shareholder in a print media company had to hold more than 26 per cent.
Why each option is right or wrong
- (a) Statement 1's disinvestment terms do not match the policy of the time.
- (b) Correct: only statement 2.
- (c) Statement 1 is rejected, so both cannot hold.
- (d) Statement 2 is accepted, so 'neither' fails.
Worth knowing: Tea and print-media FDI norms have been revised many times, and I cannot confirm the exact 2001-02 conditions, so this follows the compilation's answer.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2003, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.