UPSC Prelims 2001 Q85: Indian Economy – External Sector & Balance Of Payments
The largest share of Foreign Direct Investment (1997 - 2000) went to
- (a) Food and food product sector
- (b) Engineering sector
- (c) Electronics and electric equipment sector
- (d) Service sector
Answer: (b) Engineering sector
Explanation
Sector with the largest share of Foreign Direct Investment (1997-2000)
| Sector | Share of FDI (1992-2000 approvals/inflows) |
|---|---|
| Engineering | About 20% — the largest |
| Electronics and electrical equipment | About 12-13% |
| Chemicals and allied products | About 12% |
| Food and food products / services | Smaller shares |
The Economic Survey 2000-01 showed engineering as the top sector for FDI inflows in the late 1990s, with about a fifth of the total, followed by electronics and electrical equipment and chemicals.
Answer: (b) Engineering sector.
Why each option is right or wrong
- (a) Incorrect. Food and food products had a much smaller share.
- (b) CORRECT. Engineering received the largest share of FDI.
- (c) Incorrect. Electronics and electrical equipment came second.
- (d) Incorrect. Services had not yet become the top FDI sector.
Key point
Today services (financial and IT) and computer software are the top FDI sectors; Singapore and Mauritius are the top sources.
Remember
FDI late 1990s: engineering first (about 20%).
Common mistakes
- Choosing services, today's top FDI sector, for a 2001 question.
- Choosing electronics because of the IT boom.
- Using current data for an old question.
Exam tip
For old data questions, think of the economy of that time, not today's.
Sources
- Ministry of Finance — Economic Survey 2000-01, chapter 'Industry' (FDI by sector)
- Department of Industrial Policy and Promotion — SIA Newsletter, FDI inflows 1991-2000