Industry and Infrastructure — Practice Questions
UPSC Prelims-pattern practice questions on IPR 1956, PPP models, the Kelkar Committee, MSME classification and PM Gati Shakti, with full explanations.
Questions
These are original UPSC-pattern practice questions. Attempt each one before revealing the answer.
With reference to the Industrial Policy Resolution, 1956, consider the following statements:
- It classified industries into three schedules.
- New units in Schedule A industries were to be the exclusive responsibility of the State.
- It was adopted in response to a balance of payments crisis.
Which of the statements given above is/are correct?
Solution
Statements 1 and 2 are correct — Schedule A (17 industries) was the State’s exclusive domain for new units, Schedule B (12) was to be progressively State-owned, and Schedule C was left to the private sector. Statement 3 is wrong — IPR 1956 reflected the Second Plan’s heavy-industry strategy; the 1991 policy was the one that followed a BoP crisis.
Answer: B
Consider the following pairs:
| Model | Feature | |
|---|---|---|
| 1. | BOT-Toll | Traffic risk is borne by the government |
| 2. | EPC | The project is financed by the government |
| 3. | BOO | The asset is transferred to the government at the end of the concession |
How many of the pairs given above are correctly matched?
Solution
Only pair 2 is correct — in EPC, the government finances and owns the asset; the contractor only builds. Pair 1 is wrong — in BOT-Toll, the private partner collects tolls and bears traffic risk. Pair 3 is wrong — in Build-Own-Operate, ownership stays with the private partner; transfer happens in BOT and BOOT.
Answer: A
The Vijay Kelkar Committee, which submitted its report in 2015, dealt with which one of the following?
Solution
The Committee on Revisiting and Revitalising the PPP Model of Infrastructure (Kelkar, 2015) recommended equitable risk sharing, a renegotiation framework, an Infrastructure PPP Adjudication Tribunal and caution with the Swiss challenge. Capital account convertibility — Tarapore Committees; financial inclusion — Rangarajan Committee (2008); FCI restructuring — Shanta Kumar Committee (2015).
Answer: D
Consider the following statements regarding Micro, Small and Medium Enterprises (MSMEs):
- They are governed by the MSMED Act, 2006.
- Since 2020, they are classified on composite criteria of investment and annual turnover.
- Since 2020, manufacturing and service enterprises have separate investment thresholds.
Which of the statements given above is/are correct?
Solution
Statements 1 and 2 are correct. Statement 3 is wrong — the 2020 revision removed the separate thresholds for manufacturing and services and applied one set of composite criteria to both.
Answer: C
Which one of the following is not among the seven engines of the PM Gati Shakti National Master Plan?
Solution
The seven engines are railways, roads, ports, waterways, airports, mass transport and logistics infrastructure. Telecommunications is not one of the seven engines, even though utility networks are mapped on the platform.
Answer: D
Mains
What is the Hybrid Annuity Model of infrastructure development? Discuss its merits and limitations in comparison with the BOT-Toll model.
Solution
Introduction: The Hybrid Annuity Model (HAM), approved for national highways in 2016, combines EPC and BOT-Annuity: the government pays 40% of the project cost during construction, and the developer’s 60% is repaid through annuities with interest over the operation period.
Body:
- Merits over BOT-Toll: traffic risk moves to the government, which can manage it better; lower equity and debt burden on developers; revived private participation after BOT bids dried up; private efficiency in construction and maintenance retained; banks more willing to lend.
- Limitations: higher fiscal commitment and contingent liabilities for the government; annuity obligations stretch over years; land acquisition and clearance delays still hit projects; developers may under-invest in quality if maintenance standards are weakly enforced.
Conclusion: HAM is a pragmatic risk-sharing model for a phase when private appetite for traffic risk is low; its success depends on timely land, enforced maintenance standards and prudent management of annuity liabilities.