2014 GS Paper I, all questions

UPSC Prelims 2014 · GS Paper I

Question 28: Economy and Social Development

What does venture capital mean?

aA short-term capital provided to industries
bA long-term start-up capital provided to new entrepreneurs
cFunds provided to industries at times of incurring losses
dFunds provided for replacement and renovation of industries

AnswerUPSC’s answer is (b).

Venture capital is long-term, risk-bearing start-up capital given to new entrepreneurs and young firms with high growth potential but no track record, usually as equity or quasi-equity in exchange for a stake. The investor accepts a high chance of failure for a high return later. It is not short-term working capital, not rescue money for loss-making firms, and not funding for replacement or renovation of existing units.

Why each option is right or wrong
  • (a) Wrong. Short-term industrial funds are working capital, not venture capital.
  • (b) Right. Venture capital is long-term start-up capital for new entrepreneurs.
  • (c) Wrong. Funds for loss-making firms are rehabilitation or turnaround finance.
  • (d) Wrong. Replacement and renovation funds are modernisation finance.

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

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Source: UPSC, Civil Services (Preliminary) Examination 2014, General Studies Paper I, Series A. The paper on upsc.gov.in.