UPSC Prelims 2001 Q30: Indian Economy – IT & Services Sector
Assertion (A): India's software exports increased at an average growth rate of 50% since
1995 - 96.
Reason (R): Indian software companies were cost - effective and maintained international quality.
- (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: growth of India's software exports since 1995-96
| Statement | Verdict |
|---|---|
| A. Software exports grew at an average of about 50% a year since 1995-96 | True — exports rose from about US$ 0.75 billion (1995-96) to about US$ 4 billion (1999-2000) |
| R. Indian software firms were cost-effective and kept international quality | True — low costs and quality certification (SEI-CMM, ISO 9000) |
| Link | Cost and quality made Indian firms the choice for outsourcing, including Y2K work |
| Data source | NASSCOM and the Economic Survey |
In the late 1990s India's software exports grew at about 50% a year. The reason was that Indian companies were cost-effective and met international quality standards, which made them attractive for outsourcing. 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. Cost-effectiveness and quality explain the fast growth of software exports.
- (b) Incorrect. R is the direct reason for the growth.
- (c) Incorrect. R is true; Indian firms were cheap and of good quality.
- (d) Incorrect. A is true; growth was around 50% a year.
Key point
Software Technology Parks of India (1991) and the Y2K demand drove the 1990s IT boom.
Remember
Late-1990s software exports grew about 50% a year on cost and quality.
Common mistakes
- Doubting the 50% figure because it seems very high.
- Thinking R is only a side fact, not the cause of A.
- Forgetting the Y2K-driven demand of the late 1990s.
Exam tip
When R gives the obvious business reason for a growth fact, it usually explains A.
Sources
- NASSCOM — The IT Software and Services Industry in India: Strategic Review (2000)
- Ministry of Finance — Economic Survey 2000-01, chapter on external sector and services