2023 GS Paper I, all questions

UPSC Prelims 2023 · GS Paper I

Question 71: Economy and Social Development

Consider the following statements with reference to India :

  1. 1.According to the 'Micro, Small and Medium Enterprises Development (MSMED) Act, 2006', the 'medium enterprises' are those with investments in plant and machinery between ₹ 15 crore and ₹ 25 crore.
  2. 2.All bank loans to the Micro, Small and Medium Enterprises qualify under the priority sector.

Which of the statements given above is/are correct?

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

AnswerUPSC’s answer is (b).

Statement 1 is wrong. The MSMED Act, 2006 defined medium manufacturing enterprises by investment in plant and machinery of more than ₹5 crore and up to ₹10 crore, and the 2020 revision replaced this with investment up to ₹50 crore and turnover up to ₹250 crore; ₹15 to 25 crore matches neither. Statement 2 is correct: RBI's priority sector guidelines treat all bank loans to micro, small and medium enterprises as priority sector lending.

  • 1. Medium enterprises were ₹5 to 10 crore in plant and machinery under the 2006 Act, and later ₹50 crore under the 2020 revision.
  • 2. All bank loans to MSMEs count as priority sector lending.

How you could have got this

  1. If you were sure statement 2 is correct, (a) and (d) go: each of them leaves 2 out.

    What you needed to know: All bank loans to MSMEs count as priority sector lending.

    The red flag in statement 2 is “all”. In UPSC’s papers, statements with “all” were true 41% of the time (76 statements). A hint, not a rule.

  2. Then, if you were sure statement 1 is not correct, (c) goes: it includes 1.

    What you needed to know: Medium enterprises were ₹5 to 10 crore in plant and machinery under the 2006 Act, and later ₹50 crore under the 2020 revision.

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

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) Statement 1 states a wrong investment range.
  • (b) Correct: only statement 2 holds.
  • (c) Statement 1 is wrong, so not both.
  • (d) Statement 2 is correct, so not neither.

Worth knowing: MSME limits were revised again from April 2025 (medium enterprises up to ₹125 crore investment and ₹500 crore turnover); UPSC's answer rests on the definitions as they stood in 2023.

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

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Source: UPSC, Civil Services (Preliminary) Examination 2023, General Studies Paper I, Series A. The paper on upsc.gov.in.