Decision Making and Problem Solving (IAS Prelims CSAT Paper-II (Aptitude)): Questions 1 - 4 of 8

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Passage

Net profits are only 22 % of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the State-led entrepreneurship played an important role in triggering India’s industrialization, our evolving development needs, comparatively less-than satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce competition policies would suggest that the time has come to review the role of public sector.

What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance-sheet of the State. If the government did not own rural roads, they would not exist. Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement of forest cover will have to be a new priority for the public sector assets.

Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market, which demonstrates there is no gap in technology. Indian companies are buying up global steel companies, which shows there is no gap in capital availability. Under these conditions, private ownership works best. Private ownership is clearly desirable in regulated industries, ranging from finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution - government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the tax payer is ever present.

There is also the conflict of interest between government as an owner and as the regulator. The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action. (2014)

Question number: 1 (1 of 4 Based on Passage) Show Passage

» Decision Making and Problem Solving » Judgment

MCQ▾

Question

The portfolio composition of the government refers to

Choices

Choice (4) Response

a.

Mix of government investment in different industrial sectors.

b.

Buying Return on Investment yielding capital assets.

c.

Public sector assets quality.

d.

Investment in liquid assets.

Question number: 2 (2 of 4 Based on Passage) Show Passage

» Decision Making and Problem Solving » Judgment

MCQ▾

Question

According to the passage, rural roads should be in the domain of public sector only. Why?

Choices

Choice (4) Response

a.

Private sector need not have any social responsibility.

b.

Government takes money from tax payers and hence it is the responsibility of government only.

c.

Private sector cannot have monetary gains in this.

d.

Rural development work is the domain of government only.

Question number: 3 (3 of 4 Based on Passage) Show Passage

» Decision Making and Problem Solving » Judgment

MCQ▾

Question

According to the passage, what is/are reason/reasons for saying that the time has come to review the role of public sector?

1. Now public sector has lost its relevance in the industrialization process.

2. Public sector does not perform satisfactorily.

3. Entrepreneurship in private sector is expanding.

4. Effective competition policies are available now.

Which of the statements given above is/are correct in the given context?

Choices

Choice (4) Response

a.

2, 3 and 4 only

b.

1 and 3 only

c.

2 only

d.

1, 2, 3 and 4

Question number: 4 (4 of 4 Based on Passage) Show Passage

» Decision Making and Problem Solving » Judgment

MCQ▾

Question

The author prefers government as the umpire and private sector as players because

Choices

Choice (4) Response

a.

Government is the ultimate in policy formulation.

b.

Government has no control over private sector players.

c.

Government prescribes norms for a fair play by the private sector.

d.

All of the above

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