UPSC Prelims 2001 Q29: Indian Economy – Infrastructure & Industry
Assertion (A): There was an increase in industrial production during 1999 - 2000.
Reason (R): The period witnessed a stable exchange rate and improved business sentiments.
- (a) Both A and R are individually true, and R is the correct explanation of A
- (b) Both A and R are individually true, but R is NOT a correct explanation of A
- (c) A is true, but R is false
- (d) A is false, but R is true
Answer: (a) Both A and R are individually true, and R is the correct explanation of A
Explanation
Assertion-Reason: industrial production during 1999-2000
| Statement | Verdict |
|---|---|
| A. Industrial production increased during 1999-2000 | True — IIP growth rose to about 6.7% from about 4% in 1998-99 |
| R. The period had a stable exchange rate and improved business sentiment | True — the rupee was steady after the 1997-98 Asian crisis, and confidence improved |
| Link | Steady rupee and better sentiment helped demand and investment, so production rose |
| Source of the figures | Economic Survey 1999-2000 and 2000-01, chapter on industry |
The Economic Survey recorded a recovery in industry in 1999-2000 after the slowdown of the Asian crisis years. It credited a stable exchange rate, low inflation and improved business sentiments, so R explains A.
Answer: (a) Both A and R are individually true, and R is the correct explanation of A.
Why each option is right or wrong
- (a) CORRECT. Industrial production rose, helped by a stable rupee and better sentiment.
- (b) Incorrect. R is the reason the Survey gave for the industrial recovery.
- (c) Incorrect. R is true; the rupee was stable and sentiment improved.
- (d) Incorrect. A is true; industrial production did increase in 1999-2000.
Key point
Index of Industrial Production (IIP): released by the National Statistics Office (MoSPI); current base 2011-12.
Remember
1999-2000: industrial recovery on a stable rupee and better sentiment.
Common mistakes
- Thinking the Asian crisis slowdown continued into 1999-2000.
- Treating R as just a separate fact rather than the cause.
- Confusing industrial output with GDP growth.
Exam tip
For economy A-R questions of an old year, recall what that year's Economic Survey said.
Sources
- Ministry of Finance — Economic Survey 2000-01, chapter 'Industry'
- Reserve Bank of India — Annual Report 1999-2000, chapter on the real economy