2011 GS Paper I, all questions

UPSC Prelims 2011 · GS Paper I

Question 85: Economy and Social Development

Why is the Government of India disinvesting its equity in the Central Public Sector Enterprises (CPSEs) ?

  1. 1.The Government intends to use the revenue earned from the disinvestment mainly to pay back the external debt.
  2. 2.The Government no longer intends to retain the management control of the CPSEs.

Which of the statements given above is/are correct ?

a1 only
b2 only
cBoth 1 and 2
dNeither 1 nor 2

AnswerThe answer is (d).

Disinvestment is the sale of part of the government's equity in public sector enterprises. The government has said it keeps a majority holding and management control in most CPSEs, so it is not giving up control. The proceeds were directed to the National Investment Fund, meant for social sector spending and capital investment in public enterprises, not mainly to repay external debt. Both statements are therefore wrong.

  • 1. Proceeds went to the National Investment Fund, not mainly to repay external debt.
  • 2. The government generally keeps a majority stake and management control.

How you could have got this

  1. If you were sure statement 1 is not correct, (a) and (c) go: each of them includes 1.

    What you needed to know: Proceeds went to the National Investment Fund, not mainly to repay external debt.

  2. Then, if you were sure statement 2 is not correct, (b) goes: it includes 2.

    What you needed to know: The government generally keeps a majority stake and management control.

Only (d) is left. This one needs every statement.

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) Proceeds are not meant mainly for repaying external debt.
  • (b) The government generally retains management control of CPSEs.
  • (c) Both statements are wrong.
  • (d) Right: neither statement is correct.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2011, General Studies Paper I, Series A. The paper on upsc.gov.in.