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MCQs with answers on “Public Sector Enterprises: Role and Reforms” for the Civil Services Examination
1. What is the primary role of public sector enterprises (PSEs) in India?
A) Profit Maximization
B) Providing Public Goods
C) Promoting Private Sector Interests
D) Enhancing Shareholder Wealth
Answer: B) Providing Public Goods
2. Which of the following is a major objective of public sector enterprises?
A) Social Justice
B) Increasing Shareholder Dividends
C) Reducing Market Competition
D) Expanding Market Share
Answer: A) Social Justice
3. The concept of “Navratna” status is associated with which type of public sector enterprises?
A) Miniratna
B) Maharatna
C) Maharatna
D) Navratna
Answer: D) Navratna
4. What is the key difference between Maharatna and Navratna status?
A) Size of the Enterprise
B) Number of Employees
C) Financial Performance
D) Investment Powers
Answer: D) Investment Powers
5. Which Act governs the establishment and management of public sector enterprises in India?
A) Companies Act, 1956
B) Public Enterprises Act, 1965
C) Indian Trusts Act, 1882
D) Securities Contract Regulation Act, 1956
Answer: B) Public Enterprises Act, 1965
6. What was the primary goal of the economic reforms introduced in India in 1991?
A) Nationalization of Industries
B) Liberalization and Privatization
C) Expansion of Public Sector Enterprises
D) Centralized Planning
Answer: B) Liberalization and Privatization
7. Which of the following is a key feature of a “Miniratna” public sector enterprise?
A) Can invest up to ₹1,000 crore without government approval
B) Can undertake joint ventures with foreign companies
C) Has the ability to make independent decisions on investment projects
D) Receives funding only through the government budget
Answer: C) Has the ability to make independent decisions on investment projects
8. Which committee is known for recommending reforms in public sector enterprises during the 1990s?
A) Narasimham Committee
B) Bimal Jalan Committee
C) Rangarajan Committee
D) Kelkar Committee
Answer: A) Narasimham Committee
9. The “Disinvestment” policy refers to:
A) Increasing government stake in PSEs
B) Selling government shares in public sector enterprises
C) Reinvesting profits of PSEs in new projects
D) Merging PSEs with private companies
Answer: B) Selling government shares in public sector enterprises
10. What does the term “Privatization” imply in the context of public sector reforms?
A) Selling PSEs to foreign investors
B) Increasing public ownership in PSEs
C) Shifting ownership from the government to private entities
D) Merging PSEs with government organizations
Answer: C) Shifting ownership from the government to private entities
11. The “Performance Management System” in public sector enterprises is aimed at:
A) Increasing employee salaries
B) Reducing government control
C) Enhancing efficiency and productivity
D) Expanding market share
Answer: C) Enhancing efficiency and productivity
12. Which public sector enterprise is known for its involvement in the oil and gas sector?
A) Hindustan Aeronautics Limited
B) Indian Oil Corporation Limited
C) Steel Authority of India Limited
D) Bharat Heavy Electricals Limited
Answer: B) Indian Oil Corporation Limited
13. What is the main aim of setting up a “Special Purpose Vehicle (SPV)” in the context of public sector enterprises?
A) To facilitate joint ventures with private firms
B) To manage specific projects or assets independently
C) To acquire other public sector enterprises
D) To privatize the entire public sector enterprise
Answer: B) To manage specific projects or assets independently
14. Which of the following is a key challenge faced by public sector enterprises?
A) High operational efficiency
B) Excessive profitability
C) Bureaucratic red tape
D) Effective corporate governance
Answer: C) Bureaucratic red tape
15. The “Maharatna” status allows a public sector enterprise to:
A) Enter into joint ventures without government approval
B) Invest up to ₹5,000 crore without government approval
C) Take strategic decisions independently
D) Operate exclusively within the Indian market
Answer: B) Invest up to ₹5,000 crore without government approval
16. Which of the following is an example of a public sector enterprise in the banking sector?
A) Bharat Electronics Limited
B) State Bank of India
C) Coal India Limited
D) National Thermal Power Corporation
Answer: B) State Bank of India
17. The “Public Sector Undertakings (PSUs)” refer to:
A) Government-owned corporations
B) Private sector companies
C) Non-governmental organizations
D) International companies operating in India
Answer: A) Government-owned corporations
18. The term “Corporate Governance” in the context of public sector enterprises means:
A) Management of financial resources only
B) Accountability and transparency in decision-making
C) Increasing government interference
D) Ensuring higher salaries for executives
Answer: B) Accountability and transparency in decision-making
19. The “Nationalization” of public sector enterprises refers to:
A) Selling state-owned enterprises to private entities
B) Bringing private enterprises under government control
C) Transfer of privately-owned enterprises to government ownership
D) Merging public sector enterprises with private firms
Answer: C) Transfer of privately-owned enterprises to government ownership
20. Which of the following committees was responsible for recommending the disinvestment policy in the 1990s?
A) Rath Committee
B) Narasimham Committee
C) Kelkar Committee
D) Rangarajan Committee
Answer: B) Narasimham Committee
21. The “Public Enterprises Selection Board (PESB)” is tasked with:
A) Disbursing funds to public sector enterprises
B) Appointing top executives in public sector enterprises
C) Conducting audits of public sector enterprises
D) Privatizing public sector enterprises
Answer: B) Appointing top executives in public sector enterprises
22. The term “Devolution” in the context of public sector enterprises refers to:
A) Increasing government control
B) Transferring powers to regional authorities
C) Privatizing state-owned enterprises
D) Merging enterprises with private firms
Answer: B) Transferring powers to regional authorities
23. Which of the following is a significant benefit of privatizing public sector enterprises?
A) Increased government revenue
B) Improved efficiency and innovation
C) Higher employment in the public sector
D) Reduced competition in the market
Answer: B) Improved efficiency and innovation
24. The “Statutory Corporation” model refers to:
A) Private companies with government investment
B) Government-run enterprises with specific legal status
C) Joint ventures between private and public sectors
D) Non-profit organizations funded by government grants
Answer: B) Government-run enterprises with specific legal status
25. What role do public sector enterprises play in economic development?
A) Limited impact on economic growth
B) Solely focused on generating profits
C) Contributing to infrastructure development and employment
D) Exclusively providing consumer goods
Answer: C) Contributing to infrastructure development and employment
26. The “Board of Directors” in a public sector enterprise is responsible for:
A) Day-to-day management of operations
B) Strategic decision-making and oversight
C) Handling employee grievances
D) Directly managing the financial accounts
Answer: B) Strategic decision-making and oversight
27. Which of the following is a major reform initiative for public sector enterprises?
A) Expanding monopolistic practices
B) Strengthening bureaucratic control
C) Enhancing transparency and accountability
D) Increasing government subsidies
Answer: C) Enhancing transparency and accountability
28. Which public sector enterprise is involved in the production of steel?
A) Bharat Heavy Electricals Limited
B) Steel Authority of India Limited
C) Hindustan Aeronautics Limited
D) Indian Oil Corporation Limited
Answer: B) Steel Authority of India Limited
29. The “Government Company” model refers to:
A) Companies with less than 50% government ownership
B) Companies with more than 50% government ownership
C) Private companies funded by government loans
D) Non-governmental organizations funded by government grants
Answer: B) Companies with more than 50% government ownership
30. What is the impact of the “Right to Information (RTI) Act” on public sector enterprises?
A) Reduced transparency and accountability
B) Increased government control
C) Enhanced transparency and public scrutiny
D) Limited access to financial data
Answer: C) Enhanced transparency and public scrutiny
These questions cover various aspects of public sector enterprises, their roles, reforms, and related policies. They are designed to test a comprehensive understanding of the topic for the Civil Services Examination.
