2013 CSAT, all questions

UPSC Prelims 2013 · CSAT

Question 3: Reading Comprehension

Passage – 2 · as printed by UPSC
Passage beginning “Corporate governance is based on principles such…”Passage beginning “Corporate governance is based on principles such…”

According to the passage, which of the following should be the practice/practices in good corporate governance ?

  1. 1.Companies should always comply with labour and tax laws of the land.
  2. 2.Every company in the country should have a government representative as one of the independent directors on the board to ensure transparency.
  3. 3.The manager of a company should never invest his personal funds in the company.

Select the correct answer using the codes given below :

a1 only
b2 and 3 only
c1 and 3 only
d1, 2 and 3

AnswerUPSC’s answer is (a).

Only statement 1 is stated: complying with all the laws of the land is listed among the principles of corporate governance, and labour and tax laws are part of that. Statement 2 is not in the passage; it values an active group of independent directors but never says they must be government nominees. Statement 3 stretches a different point: managers are asked to keep personal and company funds distinct, not to refuse ever to invest their own money. Watch for extreme words such as every and never.

  • 1. Compliance with all laws of the land is named as a governance principle.
  • 2. Independent directors are praised, but no government representative is required.
  • 3. The passage asks for separating personal and company funds, not a ban on personal investment.

How you could have got this

  1. If you were sure statement 3 is not correct, (b), (c) and (d) go: each of them includes 3.

    What you needed to know: The passage asks for separating personal and company funds, not a ban on personal investment.

Only (a) is left. You didn’t need statements 1 or 2.

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) Right. Only the duty to follow all laws of the land is stated.
  • (b) Wrong. A government nominee as director is never mentioned, and the fund point is about keeping money separate.
  • (c) Wrong. Statement 3 turns 'keep funds distinct' into 'never invest', which the passage does not say.
  • (d) Wrong. Statements 2 and 3 go beyond the passage.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2013, General Studies Paper II (CSAT), Series A. The paper on upsc.gov.in.