Civics Polity · General Awareness

Indian Governance and Policy

912 Questions

Indian Governance and Policy covers the implementation of government schemes, public finance, and bilateral relations. It evaluates the impact of administrative and constitutional bodies in India. This subject is a mainstay in civil services and state examination prelims.

Government schemesBilateral relationsPublic financeConstitutional bodiesTrade and commerce

Indian Governance and Policy Questions

Multiple choice

Which of the following was/were not a feature of the IGF at this time?

Directions: Read the passage given below and answer the following question.

Netheads build, run and protect the internet. They often profit from it too. More than 2,000 of them from more than 100 countries descended on Nairobi this week for the latest Internet Governance Forum (IGF), a conference organised under United Nations auspices. The ponderous official theme was the internet “as a catalyst for change”, with a lot of nodding to WikiLeaks and the Arab spring. The reality outside the conference hall, the UN headquarters in the Kenyan capital, was more striking. Kenyans nowadays often go online on their mobile phones. Surfing the web is getting faster and cheaper by the day. The internet is no longer a geeks' affair in the rich world, but woven into the fabric of business and life even in the poor one.
The IGF is not a typical UN meeting with a carefully staged agenda and much diplomatic protocol. All participants had the same right to take the floor. Government suits had to listen patiently to the complaints of internet activists. And the end of the shindig was not marked by a finely tuned communiqué, but by a workshop dedicated to what the organisers should do better.
All this makes the IGF an unusual grouping. It is in effect a poster child for what insiders like to call the “multi-stakeholder” model. All involved have a say and decisions are taken by “rough consensus”. This approach has worked for the internet so far, but it is increasingly under attack. Governments now want to be given the last word on contentious issues rather than being merely treated as just another stakeholder.

  1. The definitive agenda of discussing internet protocol

  2. The discussions on how internet is a catalyst for change

  3. A workshop on giving organisers a point of view of the participants about bettering the program

  4. The discussions about WikiLeaks and the Arab spring

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

No, as the passage indicates that this program did not have a set agenda and a protocol. The first line of the second passage states the answer.

Multiple choice

The latest Internet Governance Forum (IGF) conference held at Nairobi was organised by

Directions: Read the passage given below and answer the following question.

Netheads build, run and protect the internet. They often profit from it too. More than 2,000 of them from more than 100 countries descended on Nairobi this week for the latest Internet Governance Forum (IGF), a conference organised under United Nations auspices. The ponderous official theme was the internet “as a catalyst for change”, with a lot of nodding to WikiLeaks and the Arab spring. The reality outside the conference hall, the UN headquarters in the Kenyan capital, was more striking. Kenyans nowadays often go online on their mobile phones. Surfing the web is getting faster and cheaper by the day. The internet is no longer a geeks' affair in the rich world, but woven into the fabric of business and life even in the poor one.
The IGF is not a typical UN meeting with a carefully staged agenda and much diplomatic protocol. All participants had the same right to take the floor. Government suits had to listen patiently to the complaints of internet activists. And the end of the shindig was not marked by a finely tuned communiqué, but by a workshop dedicated to what the organisers should do better.
All this makes the IGF an unusual grouping. It is in effect a poster child for what insiders like to call the “multi-stakeholder” model. All involved have a say and decisions are taken by “rough consensus”. This approach has worked for the internet so far, but it is increasingly under attack. Governments now want to be given the last word on contentious issues rather than being merely treated as just another stakeholder.

  1. WikiLeaks

  2. Kenyan Government

  3. United Nations

  4. Netheads Association Inc.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The passage indicates that the IGF was organised under the auspices of the UN.

Multiple choice

Which of the following best explains why IGF is a ‘multi-stakeholder model'?

Directions: Read the passage given below and answer the following question.

Netheads build, run and protect the internet. They often profit from it too. More than 2,000 of them from more than 100 countries descended on Nairobi this week for the latest Internet Governance Forum (IGF), a conference organised under United Nations auspices. The ponderous official theme was the internet “as a catalyst for change”, with a lot of nodding to WikiLeaks and the Arab spring. The reality outside the conference hall, the UN headquarters in the Kenyan capital, was more striking. Kenyans nowadays often go online on their mobile phones. Surfing the web is getting faster and cheaper by the day. The internet is no longer a geeks' affair in the rich world, but woven into the fabric of business and life even in the poor one.
The IGF is not a typical UN meeting with a carefully staged agenda and much diplomatic protocol. All participants had the same right to take the floor. Government suits had to listen patiently to the complaints of internet activists. And the end of the shindig was not marked by a finely tuned communiqué, but by a workshop dedicated to what the organisers should do better.
All this makes the IGF an unusual grouping. It is in effect a poster child for what insiders like to call the “multi-stakeholder” model. All involved have a say and decisions are taken by “rough consensus”. This approach has worked for the internet so far, but it is increasingly under attack. Governments now want to be given the last word on contentious issues rather than being merely treated as just another stakeholder.

  1. Everyone had a chance to put their points of view across.

  2. The organisers were a mixed group of all interested parties.

  3. Netheads from more than 100 countries participated.

  4. The decisions were taken by a rough consensus as everyone had an equal say.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the correct answer. The passage indicates in the last paragraph that everyone has an equal say and the decisions are taken by a rough consensus.

Multiple choice
  1. Only I is strong.

  2. Only II is strong.

  3. Both I and II are strong.

  4. Neither I nor II is strong.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This is the correct answer as both arguments are strong. The banning of cars on Tuesdays will encourage people to carpool and use public transport since they will have to make alternate arrangements to reach their destinations on those days. The banning of cars for one day a week will put an added burden on the public transport system as all the people who use cars on that day will have to depend upon the public transport system, which might not be able to adjust all the added rush.

Multiple choice
  1. It is an advisory body.

  2. It is also called as Shadow Cabinet.

  3. It is a constitutional body.

  4. NAC was set up in 2004.

  5. It was set to implement the National Common Minimum Programme, or CMP.

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is not a constitutional body. On 23 March 2006, Sonia Gandhi its Chairperson had resigned after an Office of profit controversy.

Multiple choice
  1. The Commission consists of a Chairman and ten Members.

  2. The Chairman and other members of the UPSC are appointed by the Chief Justice of India.

  3. Every member holds office for a term of maximum six years.

  4. The Union Public Service Commission is India's central agency authorized to conduct Combined Defence Services Examination.

  5. The UPSC annually submits a report of its work to the President of India.

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Chairman and other members of the UPSC are appointed by the President of India. At least half of the members of the Commission are Civil Servants (working or retired) with minimum ten years of experience either in Central or State service.

Multiple choice
  1. CADBE

  2. ADBEC

  3. CDAEB

  4. BAECD

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As the thought of this para jumble is expressed in C, therefore, C initiates the sequence. This narrows down our approach to 2 options, either (1) or (2). 'He' in E refers to 'Indian professor' in A, thus, we have AE link. Statement B explains the Condorcet's view, thus, it follows AE. Hence, (3) is the answer.

Multiple choice

Health and sanitary conditions in slums are far below the acceptable norm of human habitat in Indian cities and towns.

Directions: Given below is a passage followed by several possible inferences which can be drawn from the facts stated in the passage. You have to examine each inference separately in the context of the passage and decide upon its degree of truth or falsity.

Mark answer (1) if the inference is ‘definitely true’. i.e. it properly follows from the statement of facts given.
Mark answer (2) if the inference is ‘probably true’ though not ‘definitely true’ in the light of the facts given.
Mark answer (3) if the ‘data are inadequate’, i.e. from the facts given you cannot say whether the inference is likely to be true or false.
Mark answer (4) if the inference is ‘probably false’, though not ‘definitely false’ in the light of the facts given.
Mark answer (5) if the inference is ‘definitely false’, i.e. it cannot possibly be drawn from the facts given or it contradicts the given facts.


In its most ambitious bid ever to house 6–crore slum dwellers and realize the vision of a slum-free India, the government is rolling out a massive plan to build 50 lakh dwelling units in five years across 400 towns and cities. The program could free up thousands of acres of valuable government land across the country and generate crores worth of business for real estate developers. Proliferation of slums has had an adverse impact on the GDP growth for years. Slum dwellers are characterized by low productivity and susceptible to poor health conditions. The government believes that better housing facilities will address social issues and also have a multiplier effect and serve as an economic stimulus.

  1. (1)

  2. (2)

  3. (3)

  4. (4)

  5. (5)

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

(2) because no direct attack on standards has been made in the paragraph.

Multiple choice

Cities and towns of developed countries are free from slums.

Directions: Given below is a passage followed by several possible inferences which can be drawn from the facts stated in the passage. You have to examine each inference separately in the context of the passage and decide upon its degree of truth or falsity.

Mark answer (1) if the inference is ‘definitely true’. i.e. it properly follows from the statement of facts given.
Mark answer (2) if the inference is ‘probably true’ though not ‘definitely true’ in the light of the facts given.
Mark answer (3) if the ‘data are inadequate’, i.e. from the facts given you cannot say whether the inference is likely to be true or false.
Mark answer (4) if the inference is ‘probably false’, though not ‘definitely false’ in the light of the facts given.
Mark answer (5) if the inference is ‘definitely false’, i.e. it cannot possibly be drawn from the facts given or it contradicts the given facts.


In its most ambitious bid ever to house 6–crore slum dwellers and realize the vision of a slum-free India, the government is rolling out a massive plan to build 50 lakh dwelling units in five years across 400 towns and cities. The program could free up thousands of acres of valuable government land across the country and generate crores worth of business for real estate developers. Proliferation of slums has had an adverse impact on the GDP growth for years. Slum dwellers are characterized by low productivity and susceptible to poor health conditions. The government believes that better housing facilities will address social issues and also have a multiplier effect and serve as an economic stimulus.

  1. (1)

  2. (2)

  3. (3)

  4. (4)

  5. (5)

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

(3) There is no mentioning of developed countries being totally free from slums. Therefore, data is not adequate.

Multiple choice

Majority of the slums in cities and towns in India are on prime private properties.

Directions: Given below is a passage followed by several possible inferences which can be drawn from the facts stated in the passage. You have to examine each inference separately in the context of the passage and decide upon its degree of truth or falsity.

Mark answer (1) if the inference is ‘definitely true’. i.e. it properly follows from the statement of facts given.
Mark answer (2) if the inference is ‘probably true’ though not ‘definitely true’ in the light of the facts given.
Mark answer (3) if the ‘data are inadequate’, i.e. from the facts given you cannot say whether the inference is likely to be true or false.
Mark answer (4) if the inference is ‘probably false’, though not ‘definitely false’ in the light of the facts given.
Mark answer (5) if the inference is ‘definitely false’, i.e. it cannot possibly be drawn from the facts given or it contradicts the given facts.


In its most ambitious bid ever to house 6–crore slum dwellers and realize the vision of a slum-free India, the government is rolling out a massive plan to build 50 lakh dwelling units in five years across 400 towns and cities. The program could free up thousands of acres of valuable government land across the country and generate crores worth of business for real estate developers. Proliferation of slums has had an adverse impact on the GDP growth for years. Slum dwellers are characterized by low productivity and susceptible to poor health conditions. The government believes that better housing facilities will address social issues and also have a multiplier effect and serve as an economic stimulus.

  1. (1)

  2. (2)

  3. (3)

  4. (4)

  5. (5)

Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

There is a clear mention that slums are on government land.

Multiple choice

Development of land occupied by slums in cities of India will not have any effect on the common public.

Directions: Given below is a passage followed by several possible inferences which can be drawn from the facts stated in the passage. You have to examine each inference separately in the context of the passage and decide upon its degree of truth or falsity.

Mark answer (1) if the inference is ‘definitely true’. i.e. it properly follows from the statement of facts given.
Mark answer (2) if the inference is ‘probably true’ though not ‘definitely true’ in the light of the facts given.
Mark answer (3) if the ‘data are inadequate’, i.e. from the facts given you cannot say whether the inference is likely to be true or false.
Mark answer (4) if the inference is ‘probably false’, though not ‘definitely false’ in the light of the facts given.
Mark answer (5) if the inference is ‘definitely false’, i.e. it cannot possibly be drawn from the facts given or it contradicts the given facts.


In its most ambitious bid ever to house 6–crore slum dwellers and realize the vision of a slum-free India, the government is rolling out a massive plan to build 50 lakh dwelling units in five years across 400 towns and cities. The program could free up thousands of acres of valuable government land across the country and generate crores worth of business for real estate developers. Proliferation of slums has had an adverse impact on the GDP growth for years. Slum dwellers are characterized by low productivity and susceptible to poor health conditions. The government believes that better housing facilities will address social issues and also have a multiplier effect and serve as an economic stimulus.

  1. (1)

  2. (2)

  3. (3)

  4. (4)

  5. (5)

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The inference is probably false.

Multiple choice
  1. IFIF

  2. FIIF

  3. JIJF

  4. FIJF

  5. JFJF

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Statement 1 refers to the scrapping of the previous SEZ policy of the Central government and shows inference based on a premise. Statement 2 is a fact based on the directive as mentioned in statement 1. Statement 3 refers to Nandigram catastrophe that occurred due to a premise and is, therefore, an inference. Statement 4 provides undeniable data, and thus is factual.

Multiple choice

Why according to the passage does Britain want to send British patients to India?

Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.
PASSAGE – I
The good thing about India is nothing remains secret for long. Somehow, word gets out and into the media, and then a heated discussion begins. And thus, some bad and malafide decisions are mercifully thwarted. These are the few saving graces of our democracy as it has come to be.
The latest decision in the pipeline is the UK's National Health Services negotiating with Indian medical institutions to treat British patients in India. This cannot be left merely to the NHS and a few private medical organizations in India. There are larger issues involved that need detailed discussions. The issues range from the macro to the micro, from globalisation to overcrowding in Indian hospitals. Bureaucrats, experts, NGOS must have a say as it impacts ordinary Indians too. The purpose of discussion is not to obstruct, but to ensure an equitable decision is taken in the larger public interest and to ensure that the privileged few–be they Indian or British–do not profit at public expense.
As with every decision, there are pros and cons. A few Indian doctors and hospitals will certainly profit. But the cons are far many too to ignore. As it is, our high-quality hospitals are overcrowded with Indian patients. A waiting list already exists, which of course the privileged short-circuit using connections. So allowing British patients to use our facilities could further clog our hospitals, deny beds to Indian patients. That's clearly unacceptable. But it can happen. Remember the money-spinning Apollo hospitals, controversy-ridden for not treating enough poor patients as it is mandated to do.
One can see why sending patients to India is an easy, cheap option for the British. Even including airfare, the total expense would be much cheaper. Our doctors and nurses are inexpensive by world standards, and extremely competent at that. Also some of our private hospitals, for instance the Escorts Hospital in New Delhi, are world-class. On the other hand, Britain's National Health Service (NHS) is overburdened. Waiting lists for even routine operations like cataract run into months. The best option for Britain would be to reform their NHS, upgrade hospitals and import more doctors and nurses. But that they don't want to do. Money is always a constraint and immigration is now a touchy political issue. It appears the British government and public want to have their cake and eat it too – they want good medical service, but don't want to foot the social and political cost of importing labour. So if doctors cannot or should not come to the patients, the patients must go to the doctors. So go abroad. Not only the British, but even Scandinavians who find themselves stuck at the rear end of interminable waiting lists, are increasingly going to France and Germany for surgeries and other serious medical interventions. India can be even more attractive–it's further, but still cheaper. To buttress their argument with moral ballast, British authorities sanctimoniously claim that by bringing their patients to  India, they  are averting brain  drain. India’s  problem is not  brain drain but excess brain and brawn. As much as the West needs new markets to sell their goods, India needs new markets to absorb her labour. Excess labour and consequentially, unemployment, is our problem, WTO negotiations have shown how hypocritical western nations are. They squeeze developing countries to drop subsidies and open markets, while they retain their subsidies and close their markets to foreign goods. In no field is this more blatant than agriculture, where western nations continue with huge farm subsidies while at the time same blocking their markets to  agricultural produce from developing countries. The West is almost diabolical in the way they not only exploit the inadequacies of poorer nations, but add a moral halo to boot. They pretend they are being charitable in giving aid when in reality it is often to help Third World nations buy their own products or services. Economists have shown how trade and not aid is what really helps developing countries to prosper. Halving the West's protectionist barriers could boost developing country incomes by $150 billion a year, three times what is currently given in aid.
But one can argue that India invests heavily in training professionals and it is a heavy drain when they leave our shores. This is true but perhaps there is a solution. We have no dearth of students. More top-notch educational institutions could be established with or without foreign investment in smaller towns to ensure growth and spread of ancillary industries. Some of these students may emigrate, but many will remain. Another option is to outsource diagnostic facilities in India, maybe even get foreign institutions to invest in upgrading our government hospitals in a few, select smaller towns (with airports) to avoid overcrowding in metropolitan cities. A certain number of beds in these hospitals could then be reserved for foreign patients. This could be a win-win for them and for us because the upgradation would attract better staff, ease congestion from big cities and provide better medicare to Indians living in the region.
We live in a changing world that constantly throws up new challenges. The clever thing to do is to convert these into opportunities. There is no wisdom in being blindly obstructionist or rapaciously greedy. Coming up with creative solutions is what we need most. We shouldn't be diffident about extracting maximum mileage out of our inherent strengths so that more Indians can benefit, so that the nation as a whole develops in a more even-handed manner than the current lopsided growth concentrated entirely in a few big cities, in a few geographical zones. A creative approach could simultaneously cure many maladies.

  1. Waiting lists for cataract operations run into months in Britain.

  2. British economy has suffered a serious set back.

  3. Britain wants Indian hospitals and doctors to prosper.

  4. The medical care is cheaper in India than in Britain.

  5. None of the above

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

(1) can be inferred from 4th para, 4th, 5th lines. (4) may be true for persons, but not for Britain as a whole.

Multiple choice

How according to the passage can the western countries be labelled 'hypocritical'?

Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.
PASSAGE – I
The good thing about India is nothing remains secret for long. Somehow, word gets out and into the media, and then a heated discussion begins. And thus, some bad and malafide decisions are mercifully thwarted. These are the few saving graces of our democracy as it has come to be.
The latest decision in the pipeline is the UK's National Health Services negotiating with Indian medical institutions to treat British patients in India. This cannot be left merely to the NHS and a few private medical organizations in India. There are larger issues involved that need detailed discussions. The issues range from the macro to the micro, from globalisation to overcrowding in Indian hospitals. Bureaucrats, experts, NGOS must have a say as it impacts ordinary Indians too. The purpose of discussion is not to obstruct, but to ensure an equitable decision is taken in the larger public interest and to ensure that the privileged few–be they Indian or British–do not profit at public expense.
As with every decision, there are pros and cons. A few Indian doctors and hospitals will certainly profit. But the cons are far many too to ignore. As it is, our high-quality hospitals are overcrowded with Indian patients. A waiting list already exists, which of course the privileged short-circuit using connections. So allowing British patients to use our facilities could further clog our hospitals, deny beds to Indian patients. That's clearly unacceptable. But it can happen. Remember the money-spinning Apollo hospitals, controversy-ridden for not treating enough poor patients as it is mandated to do.
One can see why sending patients to India is an easy, cheap option for the British. Even including airfare, the total expense would be much cheaper. Our doctors and nurses are inexpensive by world standards, and extremely competent at that. Also some of our private hospitals, for instance the Escorts Hospital in New Delhi, are world-class. On the other hand, Britain's National Health Service (NHS) is overburdened. Waiting lists for even routine operations like cataract run into months. The best option for Britain would be to reform their NHS, upgrade hospitals and import more doctors and nurses. But that they don't want to do. Money is always a constraint and immigration is now a touchy political issue. It appears the British government and public want to have their cake and eat it too – they want good medical service, but don't want to foot the social and political cost of importing labour. So if doctors cannot or should not come to the patients, the patients must go to the doctors. So go abroad. Not only the British, but even Scandinavians who find themselves stuck at the rear end of interminable waiting lists, are increasingly going to France and Germany for surgeries and other serious medical interventions. India can be even more attractive–it's further, but still cheaper. To buttress their argument with moral ballast, British authorities sanctimoniously claim that by bringing their patients to  India, they  are averting brain  drain. India’s  problem is not  brain drain but excess brain and brawn. As much as the West needs new markets to sell their goods, India needs new markets to absorb her labour. Excess labour and consequentially, unemployment, is our problem, WTO negotiations have shown how hypocritical western nations are. They squeeze developing countries to drop subsidies and open markets, while they retain their subsidies and close their markets to foreign goods. In no field is this more blatant than agriculture, where western nations continue with huge farm subsidies while at the time same blocking their markets to  agricultural produce from developing countries. The West is almost diabolical in the way they not only exploit the inadequacies of poorer nations, but add a moral halo to boot. They pretend they are being charitable in giving aid when in reality it is often to help Third World nations buy their own products or services. Economists have shown how trade and not aid is what really helps developing countries to prosper. Halving the West's protectionist barriers could boost developing country incomes by $150 billion a year, three times what is currently given in aid.
But one can argue that India invests heavily in training professionals and it is a heavy drain when they leave our shores. This is true but perhaps there is a solution. We have no dearth of students. More top-notch educational institutions could be established with or without foreign investment in smaller towns to ensure growth and spread of ancillary industries. Some of these students may emigrate, but many will remain. Another option is to outsource diagnostic facilities in India, maybe even get foreign institutions to invest in upgrading our government hospitals in a few, select smaller towns (with airports) to avoid overcrowding in metropolitan cities. A certain number of beds in these hospitals could then be reserved for foreign patients. This could be a win-win for them and for us because the upgradation would attract better staff, ease congestion from big cities and provide better medicare to Indians living in the region.
We live in a changing world that constantly throws up new challenges. The clever thing to do is to convert these into opportunities. There is no wisdom in being blindly obstructionist or rapaciously greedy. Coming up with creative solutions is what we need most. We shouldn't be diffident about extracting maximum mileage out of our inherent strengths so that more Indians can benefit, so that the nation as a whole develops in a more even-handed manner than the current lopsided growth concentrated entirely in a few big cities, in a few geographical zones. A creative approach could simultaneously cure many maladies.

  1. They squeeze developing countries to drop subsidies and open markets.

  2. They retain their subsidies.

  3. They close their markets to foreign goods.

  4. All of the above

  5. None of the above

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Answer is in 3rd last para, 9th last line onwards.

Multiple choice

The private sector not engaging in activities related to health and education is indicative of

Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.

To those who believe the government can do nothing right, its polio eradication programme must have come as an eye-opener. Starting December 1996 nurses, health workers, government employees and others fanned out across the country administering polio vaccine to children below the age of five. Schoolchildren were pressed into service to remind the target families. Vaccination stalls were set up at railway stations. Health workers even went through trains on two days just in case some children had been missed out. The purpose of the programme is laudable. It aims to eliminate the disease from a country that has 60% of the total number of polio cases in the world. Was the coverage of rural areas as effective as that of cities? Was the vaccine potent? Whatever the questions, the implementation of the eradication programme is still impressive. It calls to mind the successful elimination of smallpox. Other government initiatives in the social sector too are laudable. There is the effort to eliminate illiteracy in more than 300 districts, the anti-leprosy programme and the successful effort to clean Surat which was until a couple of years ago the dirtiest town in the country. These programmes stand out because the government has been otherwise so ineffective in the social sector. India has the largest number of illiterates in the world. For most citizens, healthcare or clean drinking water is still only a distant dream. Malaria, after being successfully beaten down, has once again raised its head. Tuberculosis is rampant. And then are the new scourges - Aids and cancer. For all these failures, the government has a ready explanation – the lack of funds. True, even with existing funds, the health infrastructure and the public schools can be run much more effectively than they are. But the tack of funds remains a real problem. And with the constant pressure to narrow the fiscal deficit, the social sector will continue to be squeezed.
Government expenditure on health, education and other social sectors is absolutely vital. It brings enormous benefits to the country. Consider the future savings in hospital bills and orthopaedic aids or the gains from a more productive workforce. All these are tangible effects. But the private sector will not engage in these activities - not where the beneficiaries are the poorest of the poor – because it stands to make no profit, and profit is the raison d'être of the private sector. In other words, these are things the government should be doing - and that no one else can do as well. Instead, we have the lamentable sight of the government trying to ruin airlines, hotels, television channels, to take just three wide range of commercial businesses it has got stuck in. Some of these businesses are potential generators of huge profits. Yet the government manages to run its own enterprises into the ground, so that they either generate paltry profits or require budgetary support or help in the form of loans.
Last month, the head of the government's hotel business pronounced satisfaction at the fact that his organisation would require no budgetary support. This is not even funny. In the private sector, the benchmark of financial performance is the return of net worth. Where this is less than the return that could be earned on a fixed deposit, the stock market hammers the scrip down. But in most companies in the public sector, managers have yet to start worrying about such parameters. When the Centre for Monitoring Indian Economy did a survey of 245 central government enterprises in 1992-93, it found that their return on a net worth of Rs. 73,915  crore was  a meagre 4.59%.  The total gross fixed assets of these enterprises were valued at Rs. 173,501 crore. If these assets are sold at their book value and the money earned is invested in fixed deposits, the government could earn more than Rs. 25,000 crore in a year, which is roughly 40% of the fiscal deficit. In fact, these assets would probably fetch far more. What stops the government from privatising these companies? The common explanation is opposition form the labour unions. This is no more than an excuse. Workers would probably earn more than they do today if their companies were profitably run by the private sector. The real reason is that ministers and politicians would lose some of their privileges - no more free aeroplane rides, no free hotel stays, no way of getting a hapless company to pick up their bills.
Meanwhile, the country pays the cost - in illiteracy and countless deaths due to disease. The other face of an unprofitable airline is a score of villages without drinking water or a thousand preventable deaths due to malaria.

  1. its profit motive

  2. its cynicism

  3. its financial failure

  4. both (1) and (2)

  5. none of these

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The right answer is (1). The author states “because it stands to make no profit, and profit is the raison d'être of the private sector”. Pragmatism / profit motive is the only element discussed in the context of private enterprise.