2025 GS Paper I, all questions

UPSC Prelims 2025 · GS Paper I

Question 1: Economy and Social Development

With reference to investments, consider the following :

  1. IBonds
  2. IIHedge Funds
  3. IIIStocks
  4. IVVenture Capital

How many of the above are treated as Alternative Investment Funds?

aOnly one
bOnly two
cOnly three
dAll the four

AnswerThe answer is (b).

Under SEBI's Alternative Investment Funds Regulations, 2012, an AIF is a privately pooled investment fund. The three categories are Category I (venture capital, SME, social venture and infrastructure funds), Category II (private equity and debt funds) and Category III (hedge funds and similar). Bonds and stocks are ordinary securities that investors hold directly, not pooled funds. So hedge funds and venture capital are AIFs, which makes two. Remember: an AIF is a pooled fund, not an instrument.

  • I. A bond is a debt security, not a pooled fund.
  • II. Hedge funds fall in Category III of the AIF regulations.
  • III. Stocks are listed securities, not an AIF.
  • IV. Venture capital funds are Category I AIFs.

How you could have got this

No shortcut here: in a “how many” question, ruling out options doesn’t help. Every statement has to be judged.

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) Wrong: both hedge funds and venture capital qualify, so one is too few.
  • (b) Right: hedge funds (Category III) and venture capital (Category I) are AIFs; bonds and stocks are not.
  • (c) Wrong: bonds and stocks are plain securities, so three overcounts.
  • (d) Wrong: bonds and stocks are not pooled funds, so they are not AIFs.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2025, General Studies Paper I, Series A. The paper on upsc.gov.in.